No. You don't need to install the included microphone. In fact, most people don't.
Common misconception is that the units will default to the car's microphones. That's not quite true. If you don't use the included mic, the unit will listen on the mic port on the front of the screen. It sounds just as good or better than the OEM mic.
Check out the very end of this video - there's a short sample phone call I recorded so you can hear the incoming/outgoing call quality:
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