The €99 device is aimed at developing markets and offers access to Microsoft's services as well as never-before-accessible Android apps

Microsoft has unveiled its first ever smartphone powered by Google’s Android operating system.

The Nokia X2 – the first handset produced under the Finnish brand’s name since Microsoft completed its acquisition of the company – is a budget device aimed at emerging markets and runs a version of Android visually similar to Microsoft’s own Windows Phone OS.

The handset may be powered by Android (and thus have access to a Microsoft-curated selection of Android apps) but Microsoft has stacked the device full of its own services – including Skype, Bing, OneNote, Outlook, OneDrive, Here Maps and Mix Radio.

The X2 is a follow-up to the X (launched in February) and features a 4.3-inch screen, 1GB of RAM and both front- and rear-facing cameras. It's expected to cost €99 (£80) when released in July.

The X reportedly sold well, becoming the top handset in Pakistan and the third most popular in India. However, cheaper Android devices have threatened the foothold of Nokia’s budget phones with their larger app stores and ecosystems - leading to the compromise of the X2.

Despite this, Microsoft says that Nokia-branded budget devices (including the Asha range) are still being positioned as an ‘on ramp’ to its pricier Lumia devices.

By creating a unified visual look for the X2 and Windows Phone, Microsoft will be hoping the transition from cheaper to pricier devices will be natural for new smartphone users – despite the fact that Windows Phone still lags behind its rivals in terms of apps and services.