Component shortages for popular mid-priced phones have also added to the slump, the manufacturer said.
Sony Ericsson president Dick Komiyama said: “As discussed during our fourth quarter 2007 Media and Analyst Call, the market is proving to be challenging.
“This has been more pronounced in the mid-to-high end replacement sector of the market in Europe, where Sony Ericsson has stronger than average market share.
“For the last year, Sony Ericsson has been focused on expanding the breadth of its portfolio and developing its presence in new markets to lessen its historic reliance on the European high-end sector for growth.
“This strategy will continue, and our objective remains to become a top three player globally by 2011.”
Sony Ericsson plans to ship about 22 million phones this quarter, with an estimated average selling price 120 Euros (£95).
This is expected to generate net sales of up to 200 million Euros, compared with 362 million Euros in Q1 last year.
The manufacturer’s Q1 results will be out on April 23rd.