Nokia unveils inexpensive Windows phones

Chief executive Stephen Elop, at the Mobile World Congress in Barcelona, said the new phones -- a low-price ($254) smartphone that runs on Windows software and a handset with a high-resolution 41-megapixel camera -- demonstrate "the actions necessary to improve the fortunes of Nokia."

In many countries, cellphone firms subsidize sales of smartphones to customers who sign contracts. The low price of the new phone means out-of-pocket costs would be low, even if they give the handset away.

Nokia has lost a once-dominant position in the global cellphone market, with handsets running on Google's Android software and Apple iPhones enjoying booming popularity.

The Finnish company is attempting a comeback with smartphones using Microsoft's Windows software in what Elop has called a "war of ecosystems."

Nokia launched its first Windows Phone in October, saying it would gradually replace its old Symbian software in its smartphones with the Windows operating system.

Malik Saadi, an analyst at London-based Informa Telecoms & Media, said the launch of the Lumia 610 budget smartphone meant Nokia would "finally open innovation and differentiation in a market that was otherwise dominated by Android."

Neil Mawston, a London-based analyst for Strategy Analytics, said Nokia's new PureView 808 high-resolution camera phone was impressive -- but that markets were expecting more.

"Technologically it is 'wow' but they have integrated it into a Symbian phone which is viewed as, rightly or wrongly, yesterday's technology, whereas I think there was some expectation that it might be in a Windows phone which is tomorrow's technology," Mawston said.