Mobile phone giant Nokia is a week away from its return to the U.S. smartphone market, planning to launch its Nokia Lumia 710 through T-Mobile USA on Jan. 11. It will be Nokia’s first Windows Phone in the U.S. It’s an important moment for Microsoft’s attempt to come back in the phone business.

The first thing many people will notice is the price. For anyone who shudders at the thought of plunking down hundreds of dollars to buy a high-end smartphone, $49.99 for the Nokia Lumia 710 will be easy to swallow. (That’s after a $50 rebate, with a two-year contract and a qualifying data and voice plan.)

It makes sense that Microsoft and Nokia started this way. Microsoft’s biggest chance to gain market share in the smartphone market is to capture the attention of people as they upgrade from old-school cellphones, and that requires a budget smartphone.

So what will people get for the 50 bucks? I’ve been testing the Lumia 710 for the past couple weeks, using a device on loan from T-Mobile USA. These are my biggest takeaways.

Hardware: At 4.4 ounces, with gently curved backside edges, the Lumia 710 feels much better in the hand than the heavier (4.9 ounces) and squared-off iPhone 4S. Even though it’s lighter than the iPhone, the Lumia is solid — a much better device to hold than the larger and ligher Samsung Focus that I normally use as a Windows Phone test device.

That said, the Lumia 710’s push-button navigation strip (for back, start and search) takes some getting used to, and I prefer the touch-based navigation buttons that don’t require a physical click.

The phone comes with 8GB of storage.

Speed: The 1.4 GHz Snapdragon processor makes for a very responsive device when opening apps or navigating through menus. (Although the camera is a different story, see below.)

The connection is zippy, as well. The phones runs on T-Mobile’s HSPA+ network, which nominally (if not technically) qualifies as 4G these days. Using speed test apps, I routinely saw download speeds above 5 Mbps, much faster than my iPhone 4S on AT&T.

Xbox Live integration: Given the popularity of Microsoft’s game console in the United States, this the biggest selling point for Windows Phone in general, in my opinion — particularly with the recent release of the Xbox Companion app that lets Windows Phone users browse content on the Xbox 360 and control the console from the phone.

The Lumia 710 worked perfectly with Xbox Live in my tests. As with All Windows Phones, the Windows Live ID sign-in meant that my avatar was there to greet me in the Xbox Live tile (in addition to all my good-looking friends in the People tile).

Camera: The 5 megapixel camera takes good pictures, but my test device suffered from a frustrating shutter lag that I’ve experienced on some other Windows Phones. When I snap the picture, the screen first shows a freeze-frame of the moment I thought I was capturing, but then the actual picture turns out to have been taken a split-second later.

Of course, that’s not a big deal when you’re shooting a landscape or a bowl of fruit, but when the subject is a squirmy kid, that split second is often the difference between a shot worthy of sending to the grandparents and a picture that you quickly delete.

Apps: As I’ve written in the past, the app situation is why I have a hard time recommending Windows Phone to existing smartphone users. With 50,000 apps, Windows Phone app developers have most of the basics covered. But it’s rare that I feel like I’m using a best-of-class app on a Windows Phone.

Still, the Lumia 710’s built-in Nokia Drive app for voice-guided turn-by-turn navigation is a great feature, and the phone (at least on my test device) smartly begins with the Netflix app and the slick ESPN app above the fold on the start screen. T-Mobile TV offers a nice mix of live and on-demand programming, but it will cost $10/month after a 30 day trial.

Bottom line, the Lumia 710 a solid and capable smartphone, with some minor drawbacks. Especially for people buying their first smartphone, it’s worth a look. And that’s not the worst way for Microsoft and Nokia to get started together in the U.S.

See detailed specs for the phone on this Nokia page. I still have the loaner device for a few days, so feel free to shoot any questions my way.

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