Global sales of mobile phones are expected to reach 1.28 billion units this year, an 11 per cent increase on 2007, although sales in Western Europe are predicted to fall for the first time since 2001.

New forecast figures by research company Gartner show handset sales in Western Europe will fall by 1.5 per cent to 188 million units in 2008, compared with 190.9 million last year, as saturation in mature markets and a tighter grasp on spending take their toll.

Worldwide growth continues to be driven by emerging markets, with sales in Asia and the Pacific forecast to reach 472.5 million this year, an increase of 17.9 per cent on 2007.

In North America, mobile phone sales are expected to total 185.7 million in 2008, a 5.3 per cent increase from 2007, while in Japan, mobile phone sales are expected to fall by 9.1 per cent compared with 47.7 million units last year. The sharp decline is partly due to operators cutting subsidies of mobile phones, which has driven up the price of handsets for consumers, slashing sales.

Last year global mobile phone sales passed the one billion milestone for the first time, hitting 1.15 billion.

However, growth has slowed from 16 per cent growth in 2007 to 11 per cent this year. The downward trend is set to continue with growth slowing to 10.3 per cent for 2009.

Sales in Western Europe fell in 2000 and 2001 as operators reduced subsidies on prepaid mobiles, but since then the market has boomed as prices of calls and texts dropped and handsets became rapidly more advanced.

Carolina Milanesi, research director for mobile devices at Gartner, blames the recent drop in sales on high levels of mobile saturation in Western Europe, where in some countries such as the UK and Italy there are already more phones in circulation than there are people, as well as the squeeze on consumer spending and a lack of exciting new handsets on the market.

She also points to the fact operators in Europe are now increasingly locking consumers into contracts for 18 and 24 months, as opposed to one year, leading to people not been upgrading their phones as often as before.

Global mobile phone sales in the first quarter of 2008 reached 294.3 million, and Gartner expects sales in the second quarter of 2008 to hit between 300 million and 305 million units.

Ms Milanesi said: “For the second half of the year, we expect sales in the third quarter to be more than the second quarter results, but only moderately as both Motorola and LG issued warnings for a sequential drop in sales, as well as an economic environment that remains challenging.

“All the hopes for mobile phone manufacturers for the overall year-end growth results rest on the final quarter of the year when most new products will be introduced to the market and the normal seasonality will help boost sales.”

The tough economic climate has intensified the battle for market share between handset makers.

Last week, market leader Nokia, which makes four out of every ten phones sold in the world, put additional pressure on its rivals by cutting the price of its handsets by up to 10 per cent.

Motorola, which lost its second place position to Samsung at the end of last year, has seen its market share shrink from 13.5 per cent in the second quarter 2007 to 9.5 per cent in the second quarter this year, with sales down 20.8 per cent according to CCS Insight.

Meanwhile, Sony Ericsson, saw its second quarter profit collapse by 97 per cent, as demand for its high-end Walkman and camera phones slows and mid-high end handset margins fall.

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