The new Nokia 130 lacks internet connection but can play digital music and movies.
It is largely targeted at the emerging market in the developing countries. Microsoft also sees marketing opportunities for the new device as a backup phone in the developed countries.
Microsoft has in the past announced plans to scrap manufacturing of low-end phones.
In an interview with Recode, Microsoft phone unit VP Jo Harlow said the company is committed to this part of the business for the long term.
Harlow said the basic phone business is stable and growing unlike the declining feature phone segment.
