Microsoft has sold just 3.5 million Windows Phones, according to plugged-in Microsoft reporter Mary Jo Foley.

That's a mind bogglingly bad number of sales if true. Foley is a great Microsoft reporter, and is standing by her number.
Microsoft rebooted its mobile efforts in holiday of December 2010. If it only sold 3.5 million phones in the last year and a quarter, it's a truly pitiful effort.
For context, RIM shipped 11 million smartphones last quarter. (In fairness to Microsoft, shipped isn't sold, but this gives you a framework to think about Microsoft's sales.)
This morning Nokia announced that it sold 2 million Lumia phones in the last quarter. That's better than nothing, but Apple and Samsung are selling 30 million phones a quarter now.
Nokia and Microsoft are way behind in the game, and it's unclear how they're going to catch up.