Meh, WP8 runs just fine on 512MB. On the other specs, the 635 is between the Moto E and Moto G LTE, notably: it has the same processor, storage, and LTE support as the Moto G LTE, despite being the same price as the E ($129) and much cheaper than the G LTE ($219).

You have to make compromises to hit these price points, and with WP8's memory efficiency, I think the often dramatic user-visible improvement from supporting LTE is a much bigger deal than being able to play certain memory-intensive games.

If you look at forum complaints with low-end WP devices, most people complain exactly about low memory that prevents them to install a lot of interesting stuff from the Windows Phone Store. I couldn't believe when Nokia decided to limit availability of 525 to 3rd world countries (that one had 1GB), and continued offering 520/6xx in the rest of the world, and then acting surprised when their sales were dropping like crazy. And after that they decided to release 635 again with 512MB...

I remember when Elop was arguing that WP doesn't need to support more cores as it runs fine on a single core (when Nokia didn't have multicore SoC supplier and MS had only single core kernel in WP7). Immediately as Nokia signed Qualcomm and MS released multicore kernel in WP8, Elop started marketing the more cores, the better. I just have feeling that your argument is a different version of the same.

I'm not saying that 512MB isn't a step down from 1GB. I'm saying that, considering WP8's overall memory efficiency, I'd rather have LTE (Lumia 635) at the $129 price point than the extra memory (Moto E). I think for typical usage (web, e-mail, music, etc), the 635 is a lot more compelling than the E, because of LTE + double the storage. I certainly don't see how you can call it "underwhelming" given that the E with lesser specs on everything except memory has gotten very good press for being a good value.