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Nokia tonight confirmed plans to release its own phone running Google’s Android mobile operating system, expanding beyond Microsoft’s Windows Phone just as the Redmond company prepares to acquire Nokia’s device business.

Nokia-X-Dual-SIM-frontHowever, the new “Nokia X” phones will connect by default to Microsoft services, such as the OneDrive cloud storage system, not to Google’s cloud storage service, said Nokia executive Stephen Elop, introducing the phone during a news conference at Mobile World Congress in Barcelona.

Skype, Bing and are also featured in the phone.

“With this, Microsoft will be able to reach people it has never talked to before around the world,” said Elop, who will be rejoining Microsoft as part of the Nokia acquisition.

In addition to the Nokia X and Nokia X+, with 4-inch screens, the company also introduced a larger version of the phone, the Nokia XL, with a 5-inch display.

The new lineup is a concession to the strength of the Android ecosystem around the world. But Elop went out of his way during the event to say that the Nokia X doesn’t represent a white flag for Microsoft overall.

“We are deliberately using the Android open source project without Google’s cloud services,” he said, saying that he expects many Nokia X users to eventually graduate to Windows Phone, giving users “a gateway to Microsoft.”

The Nokia X will be targeted to emerging markets and priced below Nokia’s Windows Phones, starting at 89 euros or about $122.

Tony Cripps, principal analyst at Ovum, says in a statement that the Nokia X brings “a level of design and build quality to the low-price smartphone segment that is largely lacking today. Other OEMs will be forced to up their game in this key market segment.”

He adds, “This may well stimulate a response from Google, especially in developing markets where its focus on ecosystem monetization has been limited. Microsoft’s pragmatism in adopting AOSP gives it a chance of finally taking the global consumer technology fight to Google, Apple, and Samsung. The result, in the long term, may be a company barely recognizable as the one we know today.”

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