We're seeing reports pop up that discounting -- some of it heavy -- off the full retail prices of Windows Phone 7 handsets by third-party retailers this early in the game could be a sign of trouble for Microsoft, but realistically, you can't use that yardstick for guesstimating how well a phone (or a platform, in this case) is doing. Guys like Amazon, Wirefly, Simplexity (which runs a number of mobile stores, including Walmart), and Best Buy Mobile regularly undercut carriers' first-party pricing on handsets immediately following release -- or shortly thereafter -- because it's effectively a win-win: they're given multi-hundred-dollar commissions for each new contract they bring to the network, giving them the wiggle room to apply some of that cash to the sticker price. The retailers win because they're earning sales by offering phones for less than the carriers, and the carriers still win because they're pushing on-contract units either way -- and that means they've captured another long-term revenue stream, which is where the real money's at. Popular Android devices like the Epic 4G and the Vibrant (among countless others) were handled the same way in the retail channel as these Windows Phone 7 devices are being handled.
Of course, that's not to say we know Windows Phone 7 is selling well -- Microsoft's Joe Belfiore dodged questions about numbers this week at D: Dive into Mobile, which seems shady at best for a platform that's now been on the market for a solid month. We are saying, though, that you can't use third-party discounting to steer the conversation either way. Call us when AT&T or T-Mobile starts blowing out Quantums and HD7s for a penny directly when they're not tied up in some sort of holiday BOGO promotion, because that's when you have to worry.
Correction: Walmart's mobile store is actually operated by LetsTalk, not Simplexity as we'd originally reported.