NEW YORK (TheStreet) -- In the 10 months since Microsoft (MSFT - Get Report) announced it was buying Nokia's (NOK) phone business, Microsoft has been busy incorporating the new handset business, and the Lumia 635 is the first phone from the combined company. In addition to giving us the first glimpse of what Microsoft has in store it's also the first device to run the just released Windows Phone 8.1 operating system.
The luxury Windows Phones run in the 900 series and above, making the Lumia 635 a more affordable, bottom-of the-line design. That's not to say that this phone is in any way not worthy of your attention.
It's the replacement for Nokia's successful Lumia 620 from early last year, which was one of the best selling Windows phones of all time. The 620 had a smallish, 3.8-inch display and a 1 GHz, dual-core Qualcomm (QCOM) processor. The new 635 sports a 4.5-inch (854 by 480 pixels) touchscreen, and a 1.2 GHz, quad-core Snapdragon 400 processor. It may not sound like much, but these two improvements make a huge difference.
Both phones operate on 512 MB of working memory, with the 620 running on Windows Phone 8.0 OS, making it a good match. The same 512 MB and the updated OS makes the new Lumia 635 seem like it's on steroids.
Windows 8.1 brings a large number of improvements to the constantly improving software. There are three different sizes of Live Tiles which can now be used on the home screen, an "action Center" which displays notifications and activities at a glance, new data managing software, more efficient use of storage space, better battery life, a Swype-like "WordFlow" keyboard option and the best new feature of all, Cortana, Microsoft's take on digital assistants.
Cortana is an audio interface that can assist you with a number of common cell phone tasks, like setting alarms, or Web searches. It's Microsoft's version of the Android "OK, Google.." or iOS's Siri voice command system. I've had the preview version of Window Phone OS 8.1 running on a number of previous Lumia models and can say that it worked equally well on both expensive and inexpensive models. On the 635, Cortana never missed a beat.
The 635 also has a large number of built-in Windows Phone apps, making the phone a really useful tool. Software such as Microsoft Office, Skype, OneDrive cloud storage and MixRadio all work seamlessly on the new model.
There are some features which show this was designed and built as a value model. There's only 8GB of built-in storage, Luckily, you can add a mini-SD card for extra storage. There's a 5 megapixel Main Camera on the back, but, there's no camera at all up front.
On the other hand the phone also has what is now a smallish 1830 mAh removable, rechargeable battery. After 10 hours of set-up and heavy use, the battery indicator barely moved from its fully-charged position. The new operating system software seems to be doing a god job of improving what had previously been a Windows Phone sticking point. Users can expect a solid day's worth of use out of a fully charged battery.
Overall, the Lumia 635 is a terrific handset. People who are looking for an affordable smartphone should take a close look at this new budget Windows phone model. It gives similarly-priced Android phones a real run for the money. Windows Phone 8.1 improvements bring the operating system even closer to its Android and iOS rivals.
The 635 is being offered by AT&T (T), T-Mobile (TMUS) and its pre-paid subsidiary MetroPCS, as well as from Microsoft's online store. T-Mobile is currently offering the Lumia 635 for $0 down and $7 a month for two years with the proper contract. MetroPCS will be selling the phone for $99, in select stores, beginning July 18.
-- Written by Gary Krakow in New York.
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