The launch comes a month after a leaked memo revealed that Microsoft planned to kill off several of its low-cost phone families to "focus on" its more expensive Windows Phone range.
But the firm said that it was still committed to its most basic range.
"This is a massive market segment, and there are not a lot of players in this segment for the reason that scale is really important," Jo Harlow, head of Microsoft's phones business, told the BBC.
"We have the distribution and supply chain scale to compete effectively in this market. This is a space where smartphones today don't reach, so there is still very strong benefits to our business".
Ms Harlow said that Microsoft was targeting the device at low wage earners in emerging markets, but added that despite its low price, the firm should profit on the handset after deducting manufacturing and marketing costs.
They will be sold with other budget handsets running the Series 30+ operating system, which Microsoft acquired as part of its takeover of Nokia's handset division in April.
Ms Harlow confirmed, however, that the firm had called a halt to releasing further Asha and Android-powered Nokia X handsets - platforms that have the added ability of allowing users to install apps from Microsoft and third-party developers.
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