The cost of the Lumia 900 Windows phone has been reduced to $49.99 from $99 with a two-year agreement, Nokia spokesman Keith Nowak said on Sunday.

Nokia's phone is sold at AT&T Inc stores. Nowak said the price cut "is part of our ongoing lifecycle management, which is jointly done between Nokia and carrier customers."

The spokesman also said a price cut is not unusual at this time in a smartphone's life cycle, noting that Samsung has cut the price for its Galaxy S II, launched before the Lumia 900.

Once the world's dominant mobile phone provider, Nokia was late to embrace smartphones, and has also been losing market share in less expensive mobile phones.

Featuring a 4.3-inch screen, 1.4-gigahertz processor and 8-megapixel camera, the Lumia 900 uses largely untried software from Microsoft Corp.

Sales have been slow, and Nokia took a further hit when Microsoft said current phones will be unable to run its new Windows 8 software, rendering them obsolete.

Last month, Nokia said it would cut 10,000 jobs, and that its handset business would post a larger-than-expected quarterly loss. All three major credit rating agencies have downgraded Nokia to "junk" status.

Smartphones using Google Inc's Android system are expected to comprise 61 percent of the global market in 2012, while Apple's iPhone could capture more than 20 percent, International Data Corp said last month.

Nokia is expected to report second-quarter results on July 19. Analysts polled by Reuters last week expect a loss in the handset business of 236 million euros ($289 million), up from 127 million euros ($156 million) in the first quarter.

Shares of Nokia closed Friday at 1.51 euros, after earlier in the week falling to their lowest since the mid-1990s. They have slid nearly 95 percent since November 2007.

(Reporting By Sinead Carew and Jonathan Stempel in New York; editing by Gunna Dickson)

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