Worldwide sales of mobile phones reached 294.3 million in the first quarter of 2008, a 13.6 percent increase over the first quarter of 2007, Gartner reported today, but the news wasn’t good across the board. Phone sales in Western Europe decreased 16.4 percent compared to a year ago, the first decrease since Gartner started tracking the market seven years ago; Motorola (NYSE: MOT) was the only handset maker to see sales decrease year over year; and Sony (NYSE: SNE) Ericsson (NSDQ: ERIC) lost its position as the fourth-largest handset maker to South Korean LG (SEO: 066570). Release.

Here’s some key findings from the report:

-- In first place, Nokia (NYSE: NOK) sold 115.2 million mobile phones Q1, increasing its marketshare to 39.1 percent. Its sales were helped by a broad portfolio of phones that appeals to both emerging and mature markets. But competition is increasing, Gartner warned, and said Nokia must continue to innovate and improve usability and design.

-- In second place, Samsung sold 42.4 million units during the quarter, increasing its marketshare to 14.4 percent from 12.4 percent in the year-ago period. Gartner said Samsung is reacting quickly to the focus on touch-screen devices, but that it will need to diversify its designs and strengthen its lower-end portfolio to increase sales in emerging markets.

-- In third place, Motorola continued to show problems with sales falling to 29.8 million handsets in Q1, representing a 37 percent drop compared to the year-ago period. Although it introduced new models, Gartner said its portfolio is simply not competitive and has little chance of winning back its its No. 2 position, and should even watch out for LG and Sony Ericsson.

-- In Q1, LG sold 23.6 million phones, claiming a 8 percent marketshare to overtake Sony Ericsson’s fourth-place position. LG focused on touch-screen devices, but Gartner warns that the vendor needs a stronger smartphone portfolio, as consumers and operators have started to place more emphasis on this market segment.

-- In fifth place, Sony Ericsson had a rough first quarter, selling only 22.1 million units. The company said the weak results were due to the softness in the high-end segment in Western Europe. With new products coming later this year, Gartner said it is in a good position to win back the fourth-place ranking.