Lumia 635: Budget smartphone for the masses?

The physical embodiment of the more humble, mobile and cloud-focused Microsoft debuted this summer for $129.

It’s the Nokia Lumia 635 smartphone, and you already can find one even cheaper if you shop around a bit.

The Lumia 635 isn’t a dazzling device pushing the envelope of mobile computing with a huge screen, stellar camera or tricky special effects. It also suffers a bit from cost-cutting moves. But it could still become one of the world’s best-selling phones in the coming year.

Fans of high-end handsets should feel free to scoff and go back to speculating about what Apple will offer in the iPhone 6.

But the Lumia 635 is significant in a number of ways, and it’s an intriguing option for people who want a cheap but decent smartphone that’s not locked into an expensive wireless contract.

It’s also the first phone sold with Microsoft’s latest mobile operating system – Windows Phone 8.1.

Microsoft packs the phone with online services on which it’s betting its future, including the Bing-powered “Cortana” virtual assistant, a cloud-synchronized version of Office, Skype and an online storage locker and file-sharing service.

The lowly 635 is also the first Lumia phone launched since Microsoft went all-in on mobile devices and bought Nokia’s phone business for $7.2 billion in April.

It’s the successor to a wildly successful phone you may never have heard of, the Nokia Lumia 520 that went on sale early last year for about $100. Since then, the 520 has sold more than 12 million units and helped Microsoft overtake BlackBerry and pull firmly into third place among smartphone platforms, behind Android and iPhone.

The 520 helped make Windows Phone the No. 2 mobile platform in 14 overseas markets and helped it outsell the iPhone in 24 markets, said Microsoft Chief Operating Officer Kevin Turner.

In the U.S., the 520 – particularly the 521 variant sold by T-Mobile – has given Microsoft critical mass in the smartphone market.

The devices also helped lower the entry-level price of smartphone ownership over the past year, offering Microsoft’s full mobile operating system and its cloud-service bundle on a 4G device that’s sold outright for under $100.

Combined with a discount wireless plan – such as the $30 per month unlimited data offering T-Mobile sells through Wal-Mart – you’ll get the smartphone experience for about $400 per year.

That’s about two-thirds less than what people generally pay to use the latest high-end phones.

Microsoft also offers premium devices, including the big and sleek Lumia Icon sold by Verizon, with a pricier, two-year contract. But high-volume, low-price phones are the company’s biggest opportunity to broaden its presence in the “mobile-first, cloud-first” world that Chief Executive Satya Nadella describes.

Low-end phones are also a way to hook as many people as possible into Microsoft’s cloud services, where the relationship will touch every device the customer owns and is likely to continue as they upgrade to new phones in the future.

Stephen Elop, vice president of Microsoft’s device business, highlighted this strategy in a memo explaining the company’s recently announced layoffs and restructuring.

“In the near term we plan to drive Windows Phone volume by targeting the more affordable smartphone segments, which are the fastest-growing segments of the market, with Lumia,” he wrote to employees.

This isn’t a new strategy. Microsoft’s past success came from offering products that were more Toyota Camry than BMW 7 Series. A BMW is nicer, but the Camry is fine, and far more people drive one.

We’ll have to see if this approach works again as the smartphone market evolves, prices fall and hardware becomes less important than services.

For those already using a Lumia 521, the 635 is a slight upgrade.

The phone is a little bigger, with a 4.5-inch display vs. the 4-incher on the 521, and has a more modern, beveled edge that echoes the design of Microsoft’s Surface tablets. Its glass is smoother to the touch than the 521, on which my fingers seemed to drag a bit when playing games like “Wordament,” and the case feels a bit less plasticky.

The 635 also has a longer battery life and a more powerful processor, with four cores instead of two. It also has motion sensors that work with health apps so you can use the phone as a fitness monitor to keep track of steps.