Sony Ericsson has reported a drop in quarterly profits and sales amid subdued demand for the Japanese-Swedish mobile phone company's products.
Sony Ericsson has focused on top-end users
Pre-tax profit in the three months to 31 March fell 28% to 70m euros (£48m) from 97m euros a year earlier. Sales fell to 1.29bn euros from 1.34bn euros.
These were the latest tech industry figures to disappoint analysts.
Sony Ericsson said it was squeezed by lower prices while demand was hit by a "mature" product range.
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Sony Ericsson has performed well in previous quarters, winning market share and establishing itself as the world's sixth-biggest mobile phone maker.
Rivals like Nokia and Samsung, however, have recently stepped up competition, cutting prices and introducing new products such as camera phones.
Sony Ericsson has been squeezed - its average selling price per unit was 137 euros in the first quarter, down from 150 euros in the previous three months.
At the same time, its market share has dipped slightly to 6%.
"The market has been tough," Sony Ericsson chief executive and president Miles Flint told BBC News. "We are definitely seeing slower growth rates this year."
"But in a difficult market, we feel we are performing strongly."
One area of concern was Western Europe, where customers have been shifting away from contract agreements to pre-paid phones.
Sony Ericsson is revamping its 'mature' product range
That is a segment of the market where the firm has lacked handsets, something it has tried to put right in the first quarter with the launch of new models.
The company said it sold a total of 9.4 million units in the first quarter, less than expected and down from the previous three-month period.
That was to be expected, Sony Ericsson's Mr Flint said, adding that demand tended to peak in the summer and Christmas holiday periods.
As a result, it is introducing a number of new models aimed at hitting the shops in time for the two key periods.
Last month, Sony Ericsson launched three third-generation (3G) mobile phones, including the Z800, a multimedia phone with a 1.3 megapixel camera, and the K600, a successor to the non-3G T610.
The K600 is aimed at the business market and can use the same mobile accessories as the T610.
One keenly-anticipated handset is a phone walkman that lets you listen to music as well as make calls. That should hit the shops in the third quarter, Mr Flint said.
The company also will release new models throughout the year, though Mr Flint declined to give further details about the phones.
"The exciting and innovative products we announced during the first quarter have been well received and will give us a stronger portfolio during the rest of the year," he said.