Microsoft still supporting budget phones with £15 Nokia 130 release

Microsoft has announced the Nokia 130, a new low-cost mobile phone which suggests that rumours the firm is abandoning its cheaper range of handsets are wide of the mark.

The device is priced at 19 euros (£15) and lacks a data connection, meaning it will not be able to offer any of the firm's Internet services.

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Last month, a leaked memo revealed that Microsoft planned to focus on its more expensive Windows Phone range, but the company has claimed it is still committed to more affordable devices.

"This is a massive market segment, and there are not a lot of players in this segment for the reason that scale is really important," Jo Harlow, head of Microsoft's phones business, told the BBC.

"We have the distribution and supply chain scale to compete effectively in this market.

"This is a space where smartphones today don't reach, so there is still very strong benefits to our business."

Ms Harlow also added that the company was targeting the device at low wage earners in developing markets, but would still be making a profit on every handset sold.

Microsoft has confirmed that the new handset will be sold alongside other devices running the Series 30+ operating system, which the company acquired with its takeover of Nokia's handset division in April.

The firm announced that it will be halting production on its Asha and Android-powered Nokia X handsets – ranges that had been seen as stepping stones to the more powerful Lumia-branded Windows Phones.

The developing market is a growing area of focus for mobile phone manufacturers, with Microsoft's marketing materials noting that more than 300 million sub-$35 (£21) contract-free handsets are sold every year.

Samsung, India's Micromax and the Chinese firm TCL already offer rival "ultra-affordable" phones of their own.

The Nokia 130's will be one of the cheapest handsets capable of playing back video due to its ability to read files saved to a Micro SD card.

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The device will be sold in China, India, Egypt, Indonesia, Nigeria, Kenya, Pakistan, the Philippines and Vietnam, but there is currently no word on a UK release.