11/15/2010 10:55 am ET Updated May 25, 2011

Penny Pricing Signals Windows Phone 7 Struggling in Its First Week

Less than a week after the first Windows Phone 7 devices went on sale, both of AT&T's currently available models, the LG Quantum and HTC Surround, have dropped in price to a penny on Amazon Wireless. That's not good news for Windows Phone 7, especially coming on the heels of reports that only 40,000 devices were sold at launch earlier this week.

By and large, I like Windows Phone 7 and it shows promise, but it's well behind Apple's iOS 4 and Google's Android out of the gate. There are big holes -- no cut and paste and no multitasking -- plus a dearth of apps.

To be fair to Microsoft, both the LG Quantum and HTC Surround hardware wouldn't have been competitive in the smartphone market no matter which OS they were running. They're heavy, have small screens and no features that make them shine. True the HTC has a unique built-in speaker bar, but it delivers the same quality sound you can get from any number of other smartphones on the market.

Combining sub-par phones with an OS that's not quite baked is not a recipe for success. The more interesting Windows Phone 7 devices, the HTC HD7 (T-Mobile) and Samsung Focus, at least hold their own, for the most part with, with their Android cousins. But they hardly offer a compelling reason to switch to Windows Phone 7.

What Microsoft desperately needs is a class-leading device, along the lines of the iPhone 4 or the HTC myTouch 4G. But that's not going to happen for the holidays and the stockings are going to be a little light up in Redmond this year.