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Nokia announced two new Windows Phone 8 models during its news conference this morning at the Mobile World Congress in Barcelona — aiming to expand its market share by appealing to smartphone buyers on a budget and those in developing countries.

It’s part of a broader effort by Nokia and Microsoft to gain traction in the smartphone market against iPhone and Android, while securing the No. 3 position against BlackBerry. The challenge became more complicated over the weekend as Mozilla announced new carrier support for its upcoming Firefox mobile OS.

The new Nokia devices include the new Lumia 520 (pictured above) which is described as Nokia’s most affordable Windows Phone to date. The device will have the same 5 megapixel camera lens and touch-screen display as in higher-end Lumia models. It will come with a four-inch display, in five colors.

The phone will debut in Hong Kong and Vietnam, then roll out to China, India and other markets in the second quarter. T-Mobile USA will carry a version of the phone in the U.S., calling it the Lumia 521. U.S. pricing and availability haven’t yet been announced.

Update: What’s the difference between the 520 and the 521? A T-Mobile representative explains, “T-Mobile’s Nokia 521 is slightly longer (3mm) in order to accommodate the internal antenna and the flat white color finish is an exclusive to T-Mobile. All other aspects of the two devices are completely identical.”

Answering questions at the Nokia press conference, Nokia CEO Stephen Elop described this approach as part of Nokia’s broader strategy. “Some of the hardest work is taking that high-end innovation and bringing that to lower and lower price points,” he said. “We believe the approach of starting at the high end, innovating rapidly and then cascading that down is something we have to do and will continue to do.”

Nokia also announced the new Lumia 720 Windows Phone, with some of the same features as the higher-end Lumia 920.

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