Yesterday, Nokia announced the Nokia X, a low-cost, entry level Android powered Nokia smartphone, the first of its kind. It runs a skinned version of Android that looks similar to Windows Phone and utilizes Microsoft services instead of Google.

But why build and sell an Android powered smartphone that offers a Windows Phone like user experience and utilize services from Microsoft instead of simply creating an even cheaper Windows Phone device at the same price point? The answer is quite simple.

The strategy behind Nokia’s new Android phone and why invest in building and selling an Android phone

The Nokia X smartphone series utilizes Microsoft services instead of Google services (collectively known as GMS) and by offering an Android phone they are leading customers to Microsoft’s email, cloud, messaging and search services instead of GMS. But merely making users switch to Microsoft services is just a small part of their strategy, the bigger and most important part is converting users with low-cost Android phones into long term Lumia owners. Nokia hopes that Nokia X will serve as a gateway to the Lumia line of Windows Phones for people with low-cost Android devices. You start off with a good Nokia X experience, you finish up with a Lumia one. That is why Nokia skinned Android to mimic Windows Phone’s experience, like the tiles that can be moved or resized or the look and feel of the phone, which has a striking resemblance to the low-end Lumia phones.

Open-source Android 4.1.2 utilizing Microsoft services and offering Windows Phone like experience, all in the guise of a low-cost device starting at 89 euros, that is mind-blowing. You want a more powerful smartphone? Here’s a Lumia and look, it has a similar user experience!

It’s not about losing faith in Windows Phone and it’s not about price, it’s about offering a Lumia in disguise of Android to lure potentially millions of users to Microsoft’s services and make them switch to a Lumia phone later on. That’s their exact intent, it’s a bold and clever strategy.

Why would anyone buy a Nokia X over a regular low-cost Android phone like Moto G?

Nokia has a strong presence in emerging markets like India and with the durability, choice of colors and unique functionalities, Nokia has succeeded in offering a differentiated user experience than any other low-cost Android phone in the market. Factor in brand loyalty, free Skype and the ability to run (most) Android apps and access to a variety of Android stores and you have a device that could easily sell in millions. If the Lumia 520 can sell so much while running Windows Phone, why can't Nokia X which can run Android apps and offer an experience similar to Windows Phone?