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Microsoft Sells 40K Windows 7 Phones

Microsoft Windows Phone 7 story updated with comment from T-Mobile and stock movement.

NEW YORK ( TheStreet) -- As big-splash debuts go, Microsoft's (MSFT - Get Report) Windows Phone 7 launch at AT&T (T - Get Report) and T-Mobile didn't exactly make waves Monday.

Even with a glitzy media intro last month hosted by champion inside-seller and company chief Steve Ballmer, Microsoft, which spent a reported $100 million on the phone's advertising campaign, sold a mere 40,000 Windows 7 phones Monday, according to a market research source who tracks phone sales.

The anemic sales number does not include the 89,000 Microsoft employees that will be given free Windows 7 phones.

Microsoft reps declined to comment. A T-Mobile spokeswoman did not offer a number of phones sold, but said Tuesday that the Win7 phone was "already receiving strong interest from our customers right out of the gate."

Trounced by Apple's (AAPL - Get Report) iPhone and the rise of Google's (GOOG - Get Report) Android phones, Microsoft ditched its Windows Mobile software and engineered Windows Phone 7 to get a crucial restart in the mobile market. Windows Phone 7 is a make-or-break moment in smartphones as the leaders threaten to run off with the market.

So how does 40,000 Window 7 phones measure up? Google said last month that it was selling 200,000 Android phones a day. And Apple has said that its iPhone sales rate was 270,000 a day.

Microsoft didn't help itself much, said Michael Cote, an industry strategist with the Cote Collaborative. "Mondays aren't great launch days. They poured all that cash into it but they lost track of the fact that Fridays or Saturdays are the best launch days," said Cote.

Beyond the timing, Cote also thinks Microsoft may have confused consumers with too many models. Microsoft introduced nine Windows 7 phones at its October press event. "In the phone world, our surveys show that there should be a choice between A or B." For example, said Cote, offer one phone with a keyboard and another with no keyboard."

Cote also thinks Microsoft had a few lapses that gave people a reason to either wait or look elsewhere. One glaring omission: the simple copy function. "It's inexcusable that in the fourth quarter of 2010 you don't have something as basic as cut and paste," said Cote.

So is it game over for Microsoft?

No, said Nielsen telecom analyst Roger Entner. "It's early in the game," he said. "Not every product surges right out of the starting blocks. The first Android phone was not a big seller at T-Mobile."

A better test of success for Windows Phone 7 will be Christmas. "We'll see what happens with Black Friday sales," said Entner. "They'll probably cut prices like everyone else does. It's the nature of the beast. The only one that doesn't do promotions is Apple."

Microsoft shares were up 21 cents to $27.02 Tuesday afternoon.

--Written by Scott Moritz in New York.

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