Microsoft to release flagship Windows 10 phone later this year, unveils mid-range Lumia 640 and 640 XL in meantime

BARCELONA, Spain--Microsoft (NASDAQ: MSFT) reiterated that it will release at least one flagship Windows phone when it rolls out Windows 10 later this year, even as the company unveiled new mid-range Windows smartphones, the Lumia 640 and 640 XL, here at Mobile World Congress.

Stephen Elop, Microsoft's executive vice president of its devices and services unit, said that the company will unveil new Windows 10 phones in "the flagship tier" this year along with a wider range of phones. That reiterates what Microsoft CEO Satya Nadella first noted in January. The last true flagship Windows phones were the Lumia 1020, announced in mid-2013, and the Lumia 1520, from late 2013. Since then, Nokia and Microsoft (following its acquisition of Nokia's handset business) have focused on the entry-level and mid-range smartphone market in an effort to grow market share.

Windows 10 is expected to be commercially released this fall, and it will serve as a platform that can run on PCs, tablets, smartphones and more, with developers able to write apps that work across all form factors.

Elop also said that Microsoft aims to upgrade all Lumia-branded Windows phones running Windows Phone 8.1 to Windows 10, though some features may vary based on hardware limitations.

Microsoft's continued challenge remains growing its market share around the world in the face of Google's (NASDAQ: GOOG) Android-based phones and Apple's (NASDAQ: AAPL) iPhone 6 and 6 Plus. According to research firm IDC, in the fourth quarter, Windows Phone saw its market share actually shrink to 2.8 percent from 3 percent. For all of 2014, the platform saw its market share drop to 2.7 percent from 3.3 percent in 2013. Android and iOS accounted for 96.3 percent of all smartphone shipments in both the fourth quarter and all of 2014, according to IDC.

To boost its share, Microsoft will need to not only release new phones of its own but work with its hardware partners to build and market Windows phones, especially in emerging markets. Microsoft has been steadily adding dozens of new hardware partners, including Foxconn, Gionee, Lava, Longcheer, JSR, Karbonn, Micromax, Prestigio and ZTE for phones. However, so far those partnerships have not translated into stronger sales and market share for Microsoft.

Microsoft has been working to combat its weak market share by spreading its services and applications, including Office and its Outlook email client, to other platforms, including Android and iOS. Elop said that Microsoft's hope is "these cross-platform initiatives will deliver great experiences not only on our platforms but on other platforms."

In the meantime, Microsoft is working to bolster its mid-range smartphone lineup. The Lumia 640 and 640 XL run Windows Phone 8.1 but will be upgraded to Windows 10 and are powered by quad-core Qualcomm (NASDAQ:QCOM) Snapdragon 400 processors with 8 GB of onboard storage and 1 GB of RAM. The Lumia 640 has a 5-inch display and the 640 XL has a 5.7-inch screen. The Lumia 640 has an 8-megpaixel camera and the 640 XL sports a 13-megapixel camera, though both feature LED flash, a front-facing camera for Skype video calling, and Lumia Camera software. Both phones also come with LTE support in dual-SIM models for the first time. Both phones will be available in single-SIM and dual-SIM LTE and dual-SIM 3G variants. The Lumia 640 XL will also be available as a single-SIM 3G variant.

The Lumia 640 will be available starting in April and while pricing will vary by market and operator the Lumia 640 is estimated to be around $156 (€139) for the 3G model and $178 (€159) for the LTE model, before taxes and subsidies. The Lumia 640 XL will be around $212 for the 3G model and $245 for the LTE version, also before taxes and subsidies. Elop mentioned that AT&T Mobility (NYSE: T), T-Mobile US (NYSE:TMUS) and T-Mobile's MetroPCS brand will be among the carriers supporting the new phones.

Microsoft is also looking to get consumers hooked on its services; both phones come with a one-year subscription to Office 365 Personal, which includes the latest Office applications (Word, Excel, PowerPoint, Outlook and OneNote) for the phones as well as on one PC or Mac and one Windows, Android or iPad tablet, plus 1 terabyte of OneDrive cloud storage, and 60 free minutes of Skype Unlimited Worldwide calling per month.

For more:
- see this release
- see this Re/code article
- see this CNET article

Related Articles:
IDC: Android, iOS crushing Windows Phone, BlackBerry in smartphone market
Microsoft releases Windows 10 preview for a handful of phones
Microsoft to target Africa with Windows Phones costing $75 to $100
Microsoft sells record 10.5M Lumia phones in Q4, as it works to integrate Nokia
Microsoft shows off Windows 10 for mobile, as Nadella promises a wide range of phones