Nokia and US mobile carrier AT&T have slashed in half the upfront purchase prices on contract for Nokia's flagship Lumia 900 smartphone. The move follows Microsoft's recent announcement that the handset would not be able to receive the upcoming Windows Phone 8 operating system upgrade later this year.

Microsoft confirmed last month that existing Windows Phone handsets, including the entire Nokia Lumia range would not be suitable to run the new mobile OS. Instead, the Redmond-based software giant plans to offer the current generation of Windows Phone devices a halfway-upgrade to Windows Phone 7.8 so owners can take advantage of some of the new features provided by the next generation mobile OS.

The discount comes barely three months after the handset's US launch and means subscribers can get a new Lumia 900 on contract for $49.99, a saving of $50 on the previous retail price. It's unclear if this discount will be passed on to other countries where the flagship smartphone is sold.

Finnish phone maker Nokia played down the notion that the price drop was in response to Microsoft's announcement however. "This move is a normal strategy that is put in place during the lifecycle of most phones," Nokia spokesman Doug Dawson said in a statement to the Wall Street Journal. "It allows a broader consumer base to buy this flagship device at a more accessible price."

Analysts for Liberum Capital speaking with the Telegraph pointed out that Nokia's sales and earnings were on a slippery slope with its already revised Q3 earnings facing further threat. "Windows Phone 8 is likely to depress Nokia's third-quarter smartphone sales further, while also putting pressure on prices and margins. The only hope for the company is that sales can revive subsequently from the fourth quarter [of this year]."

Nokia is expected to post its second quarter earnings on July 19, with industry analysts predicting the company will report a loss in the handset business of around €236m ($288m) for the three-month period.