I experienced this firsthand when I attended a Microsoft-sponsored WP7 development course at which they were giving free phones to developers. My impression was

I experienced this firsthand when I attended a Microsoft-sponsored WP7 development course at which they were giving free phones to developers. My impression was that, for the price of maybe 30 phones, they got at least a couple high quality apps on their store. tl;dr: Microsoft is spending lots of money on WP7 apps, and it seems to be working.