Microsoft would probably sell more of them if there were some decent phones on carriers besides AT&T. Last time I got a new phone, I wanted to go Windows Phone 7, but I'm sure as hell not switching to AT&T from Verizon for it.
It might help to some extent, but I think the fact that the iPhone was so successful while it was AT&T exclusive for so long proves that it's probably not the main issue.
It also had software that was much more sophisticated and usable than any of its competitors of the time. WP7 doesn't enjoy this advantage.