Sales of mobile phones in Western Europe decreased 16.4 per cent year on year to 35.9 million in the first quarter of this year, as longer subscriber contracts took their toll.

Industry analyst Gartner said the decline was the first it has noted in the region since it began tracking the mobile devices market in 2001.

The analyst said that operators in Western Europe have been pushing sales of higher end devices by offering higher subsidies and longer contracts, with many now running at 18 months or two years. But the strategy is now having a negative impact on handset replacement cycles.

This pressure is being compounded by the credit crunch, which means typical high end handset buyers are instead opting for cheaper or free devices from the mid tier when upgrade time comes around.

Nevertheless, the emerging markets did their bit for the sector, helping to push global handset sales to 294.3 million units, a 13.6 per cent increase over the first quarter of 2007.

In the first quarter 114.4 million mobile devices were sold in the Asia Pacific region, representing a 26.6 per cent increase over the first quarter of 2007. Eastern Europe, the Middle East and Africa region notched up a 25.8 per cent increase to hit 56.4 million units, while Latin America increased 28.4 per cent to 32.5 million units.

A technology plateau hit handset sales in Japan, where unit shipments fell to 13.2 million, down 10.1 per cent year on year. Apparently a lack of new features prevented subscribers from upgrading, given that the majority of existing handsets in Japan have high end functions.

North America also struggled, with sales growing just 2.4 per cent to 41.9 million units in the first quarter.

“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. Phone manufacturers should strengthen their mid-tier offerings in order to cater to those users that might be reticent to invest too much money in replacing their old phones when the economic environment remains challenging.”

There was also a bit of movement in the vendor league tables during the first quarter. While Nokia steamed ahead in first position with sales of 115.2 million units and a slightly weaker market share of 39.1 per cent, Samsung maintained momentum with sales of 42.4 million units and a market share of 14.4 per cent.

Problems persisted at Motorola, with sales falling to 29.9 million units and market share slipping to 10.2 per cent as LG closed the gap, overtaking Sony Ericsson to take the number four position. LG sold 23.6 million devices and took a share of 8 per cent, just topping Sony Ericsson with sales of 22.1 million units and a share of 7.5 per cent.

“We remain confident that 2008 will be a growth year for the mobile phone industry. Sales, driven in particular by emerging markets, will continue to rise in the range of 10-15 per cent. However, the value of the market will be lower than we stated in our forecast update published in December 2007. This is because the current economic slowdown and higher fuel costs will force consumers to defer phone purchases in mature markets, while higher food prices will lead to longer replacement cycles in emerging ones,” said Milanesi.