"While sales in emerging markets continued to be driven by strong net new subscribers' growth, mature markets felt the pressure of an uncertain economic environment," said Carolina Milanesi, research director for mobile devices at Gartner. Sales of high-end devices in particular were lower as consumers turned to mid-tier devices when looking to upgrade their old phones.
She said phone manufacturers should strengthen their mid-tier offerings to cater to users who are reticent to invest in replacing their old phones while the economic environment remains challenging.
Finnish mobile phone Goliath Nokia sold 115.2 million units for a global market share of 39.1% during the quarter, a sharp gain from last year's 35.5% market share in the same period. Sales in the ultra-low-cost end in new growth markets remain Nokia's strong point.
South Korean handset manufacturer Samsung Electronics was in second position, selling 42.4 million units for a first-quarter market share of 14.4% compared with 12.4% in 2007, boosted by its quick focus on touch-screens.
Motorola saw a sharp drop in the quarter, selling 29.9 million units. The U.S. phone maker is still struggling to find a successor to its popular Razr handset. Milanesi said the new models it released in the year were not competitive enough to maintain its place in the market. Its market share was 10.2% compared with 18.4% last year.
"Motorola is unlikely to introduce many products in the second half of 2008, a time when most competitors will bring new additions to the market, so it stands little chance of winning back its number two position," Milanesi said. "It may even have to watch out for a threat from current number four player LG."
LG Electronics sold 23.6 million units and had an 8% market share in the quarter, moving up slightly from 6.2% in the same period in 2007. The company overtook rival Sony Ericsson in the quarter to become the fourth largest maker of mobile phones. Milanesi said LG needs to build a stronger smartphone portfolio, as consumers and operators are placing more emphasis on this segment.
Sony Ericsson fell to fifth place after selling 22.1 million units for a 7.5% market share, a drop from its 8.4% stake last year.
The company struggled in the first-quarter due to a weakened mid-to-higher-end device market, particularly in Western Europe. Consumer spending has slowed, due in part to the global economic slowdown.
Still, Milanesi said with new products for the second half of 2008 and with a stronger mid-tier portfolio, Sony Ericsson is in a good position to win back its fourth place in the market share rankings.