Is the Amazon penny smartphone sale too good to be true?

I was at the Windows Phone Inner Circle event in Seattle last night and several folks mentioned they were going to try to pick up one of the new AT&T Windows Phones through Amazon for a penny. You have probably heard of this penny sale, but if you are reading this blog, or were at the geeky phone event last night, it is highly likely that it doesn't apply to you or millions of other Americans. You see, the big caveat here is that you must be a new subscriber or add another new line. In looking at the recent CTIA report that states the number of subscriber connections has surpassed the U.S. population it seems to me there are not that many new subscribers or new lines left. Thus, Amazon is getting lots of press for this penny sale that is extremely limiting.

New customers those of you that have a family plan and then add a new line (remember you are limited to five) can get the penny phones, but keep in mind that Amazon shows adding a line creates a new contract and any grandfathered deal you have goes away. I am grandfathered into unlimited data on Verizon Wireless so I pay full price for my phones now to keep that contract intact. If you are already a subscriber then you need to agree to a contract extension and pay a much higher price (dependent on how much time you have left on your contract) for a new phone. The deals sound amazing considering that just about any smartphone other than an iPhone is covered. Also, there are no deals for new T-Mobile subscribers.

While it is great to save a couple hundred dollars on a phone, keep in mind the cost of the phone is just a small percentage of your 2-year committment. I recommend you try not to worry too much about saving $50 to $100 and instead buy the best phone you can that you can count on lasting for the two years of your contract.

If you are upgrade eligible than also make sure to check out sales at other online vendors such as Wirefly (I bought a couple phones from them and have been very happy with their service and support) and RadioShack (they perform upgrades through the carrier backend and offer free phones too).

I would love to see a carrier or online retailer step up and offer some deals for existing subscribers that could include a contract extension too. As fast as the mobile space moves, those of us who enjoy using our smartphones like upgrading every 6 months, one year, or in my case even every couple of months. I understand that they would have to subsidize such offers, but they make most of their money in the monthly fees we pay and offering early upgrade deals helps keep customers with the carrier.