Microsoft launches new "affordable flagship" Lumia smartphone

By Harro Ten Wolde

BERLIN (Reuters) - Fresh from acquiring Nokia's handset business, Microsoft unveiled the first of its new range of Lumia smartphones on Thursday, priced to challenge a market dominated by volume leader Samsung and Apple Inc.

A week before Apple is expected to launch its new iPhone 6, Microsoft, which paid $7.2 billion this year to acquire the Nokia business, introduced at the IFA consumer electronics fair in Berlin its new "affordable flagship" phone, the Lumia 830.

The new Lumia will sell globally at a price of around 330 euros ($433), before taxes, or upward of 400 euros($525) in all.

As previously expected, Microsoft also introduced a five megapixel, front-facing camera phone called the Lumia 735 which has been dubbed the 'selfie-phone' since it was demonstrated in-house to Microsoft employees in July and features a wide-angle lens for close-in photos of small groups or individuals.

The Lumia 735 will be available globally this month for 219 euros, before taxes or subsidies, for a version designed for the latest 4G networks while the third new phone, the Lumia 730, is priced at 199 euros, excluding tax, which will run on more commonly available 3G networks.

The new phones flesh out the upper end of the Lumia line-up, which has regularly won good reviews from technology experts but has yet to gain a significant following from consumers.

Smartphones run on Microsoft's Windows software, mostly Lumias, captured only 2.7 percent of the global smartphone market in the second quarter, down from 3.8 percent the year before, according to research firm Strategy Analytics.

In comparison, Google Android phones had a smartphones market share of 85 percent, while Apple's iPhone had 11.9 percent, down from 13.4 percent a year ago. Samsung, the market leader among Android-based phone makers and in smartphones overall, had a market share of 25.2 percent, down from 32.6 percent a year ago, as a result of increasingly stiff competition from lower-cost Chinese makers.

Forrester analyst Thomas Husson said Microsoft is focusing on a mid-tier strategy with a good mix of hardware and software that represents "another step in the right direction".

But while the Lumia line is gaining some traction among marketers and app developers that it needs to draw in consumers with creative software and services, he said Microsoft must become a bigger player before the industry considers it a third, "must-support" mobile platform as Android and Apple already are.

Microsoft's new chief executive, Satya Nadella, has often said the company must be "mobile first, cloud first" in order to compete in new tech markets and extend its dominance in computing beyond the PC into phones and Web-based software.

(1 US dollar = 0.7617 euros)

(Additional reporting by Bill Rigby in Seattle; Editing by Eric Auchard and Greg Mahlich)