Microsoft employees will apparently be given free Windows Phone 7 smartphones, according to staffer Tweets escaping from Microsoft Global Exchange, the company's annual sales conference (Mary Jo Foley tweeted about it first). Gizmodo's also posted an internal email purportedly from Andy Lees, senior vice president of Microsoft's Mobile Communications Business, with additional details:

"I am thrilled to announce that a new Windows Phone 7 will be made available to every Microsoft employee as we launch in each market around the world. The process will vary based on your market, your carrier, and your launch date so stay tuned for more information closer to launch."

This is exactly what you'd expect, no? Apple employees walk around campus with the iPhone, Google employees have a tendency to whip out their Android in meetings, so it stands to reason that Microsoft staffers would follow suit.

I've expended a lot of digital ink on the question of whether Windows Phone 7 will succeed. But this week's earnings numbers from both Apple and Microsoft make the stakes of that success all too clear. On the strength of its mobile devices--the iPhone and the iPad in particular--Apple posted quarterly revenues of $15.7 billion... while analysts predict that Microsoft, with much of its energies still focused on the desktop, will post revenues of $15.27 billion (the earnings call takes place at 5:30 EST).

Microsoft knows it needs to diversify into the cloud and mobile--its Worldwide Partner Conference last week devoted substantial amounts of time to both. If Windows Phone 7 succeeds beyond expectations, then Microsoft will have another robust vertical to supplement Windows 7 and the other flagship software that support its current revenue model. If it fails, then Microsoft will find itself trapped in its old paradigm, at least in the short- to medium term; while the company has a number of cloud initiatives, none have translated into awe-inspiring cash flow. (So many heads would roll in the event of a Phone 7 meltdown, it would make the recent restructuring in the Entertainment & Devices Division look like a haircut by comparison.)

Being trapped in the old paradigm is, frankly, unacceptable. Microsoft knows this. Giving its 88,000+ employees a Windows Phone 7 is a no-brainer; the next step is seeing whether it can convince a few million outsiders to put down cash for the privilege.