Walmart has dropped the price of the Nokia Lumia 710 from $49.99 down to free with a contract mere days after the phone's release. Typically, this would be a bad sign, but it's far too early to declare the Lumia 710 a flop, as some already are.

Price drops may be good for consumers, but they are a double-edged sword for retailers and hardware makers. Price drops early into a device's shelf life are often a sign that the device isn't selling well. In this case, we have to consider the source: Wal-Mart, the discount king. A quick search around the Web shows that the device is still selling at its advertised price at a number of sites.

T-Mobile USA, for example, is still selling the Lumia 710 for $49.99 with a new two-year contract. AmazonWireless.com is selling the Lumia 710 for $99.99. Best Buy is selling it for $49.99. Discount websites Wirefly and LetsTalk are offering the Lumia 710 for free, but were from the start, and that's their schtick (and there's usually a catch). Reports suggest that Nokia has discounted the model in Europe by as much as 20%, from 300 Euros down to 240 Euros. The 710 has been on sale in Europe for more than a month.

The real danger sign will be when (if) T-Mobile USA discounts the Lumia 710.

[ Read the InformationWeek review of the Lunia 710 here. ]

The Lumia is Nokia's first Windows Phone device to be released in the U.S., and its first smartphone for the U.S. market in years. Rather than explode into the U.S. with its best hardware, the Lumia 710 is a mid-range smartphone. The $49.99 price point being charged by T-Mobile USA, which is the carrier behind the 710, is extremely aggressive for a smartphone.

Most capable smartphones sell between $99 and $299 depending on the specs. If you look at T-Mobile's entire lineup, the current selection of smartphones for $49 or less is pretty pathetic. Most of them are entry-level leftovers from early- and mid-2011.

I've reviewed the Lumia 710. For free--heck, even for $49--it is a much better buy than a free or $49 Android smartphone. The screen is better than what you'd get on an Android device at that price point, as is the overall performance of the phone.

The problem is, there's always something better on the horizon. In Europe, consumers can also purchase the Lumia 800, which is a more capable (and some would say more attractive) smartphone.

Earlier this month, Nokia announced the Lumia 900, an AT&T exclusive that packs a larger screen, a better camera, and LTE 4G.

Nokia hasn't shared sales numbers of the 710 and 800 yet, other than to say that they are selling well.

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