Sony Ericsson said it shipped 22.3 million mobile handset units in the first quarter of 2008 — a two percent increase from the year-ago period, but a sharp fall from the 30.8 million units the company moved in the prior quarter.

The world’s No. 4 handset maker additionally estimates that it held an eight percent share of the global handset market at the end of the quarter — a one percentage point decline from the prior period.

“We have experienced a softening of demand for mid-to-high-end phones in the markets where we have a strong presence, particularly in Western Europe,” said Dick Komiyama, Sony Ericsson’s president.

Gartner Research Director Carolina Milanesi noted that the company is heavily dependent on the region for its overall sales performance. “No other player from the top five has a similar exposure to Western Europe,” she said.

Falling Prices

During the first quarter, the average selling price (ASP) of

Sony Ericsson’s phones decreased both sequentially and year-on-year. Company executives stressed that that should be considered the overall market trend.

Milanesi thinks two different elements are playing specific roles in perpetuating the overall trend. “One is the lengthening of the replacement cycles, as operators sign up users for longer contracts on more expensive devices in the attempt to get some return on investment on the subsidies,” noted Milanesi, who does not see that dynamic changing in the remainder of 2008.

Moreover, consumers currently might be a bit more careful with their spending and be opting for cheaper devices that do not lock them into longer contracts and high monthly tariffs. “I do not see that trend lasting into the second half of 2008, unless the economic situation gets much worse,” Milanesi said.

Komiyama additionally cited the negative impact of “quicker than anticipated” growth in emerging-market sales of lower-priced phones –…

Orginal post by Top Tech News