For the sixth quarter in a row of year-over-year comparisons, worldwide handheld device sales declined. Second quarter 2005 shipments decreased by 20.8 percent compared to second quarter 2004, according to IDC.

Second quarter 2005 shipments also fell 24.9 percent from first quarter 2005 shipments.

According to Kevin Burden, research manager of IDC"s Mobile Devices program, the drop can be attributed at least in part to stiff competition from converged mobile devices.

"The majority of people are looking at converged devices or smart phones. There"s less of a reason for having a PDA in one"s pocket when you have a smart phone to be your primary phone and it can do the functions of a PDA," said Burden.

The IDC Quarterly View noted that Palm"s market share dropped about 4 percent, while shipments were down 30.9 percent year over year.

However, there was one bright spot for the market leader and perhaps for handheld industry in general: Palm saw a 31.1 percent boost in shipments for its new LifeDrive device.

The LifeDrive is the first handheld to include a 4GB hard drive and to allow users to synchronize folders and entire directories from the handheld to the desktop.

The IDC report says another quarter will be needed before the true impact of LifeDrive can be assessed. But it may mean that if handheld manufacturers can find the right combination of unique features, they can turn the decline around or at least stop the precipitous drop in shipments.

Acer seems to have also done that with its n35 handheld. Shipping for only a couple of months, the n35, which includes GPS technology, saw a 61.1 percent increase in shipments from last quarter. Acer went from 1.3 percent market share in 2004 to 11.2 percent in 2005.

Meanwhile, Hewlett-Packard also did poorly with a year-over-year decline in shipments of 39.3 percent and a sequential loss from the first quarter 2005 of 35.2 percent.

Top 5 vendors, worldwide handheld devices -- hipment and market share, 2Q 2005 (preliminary figures):

Rank Vendor 2Q 2005 Shipments 2Q 2005 Market Share 2Q 2004 Shipments 2Q 2004 Market Share

1 Palm 638,376 36.5% 924,364 41.8%

2 Hewlett-Packard 321,928 18.4% 530,239 24.0%

3 Acer 199,921 11.4% 28,288 1.3%

4 Dell 179,200 10.2% 153,000 6.9%

5 Yakumo 58,000 3.3% 13,000 0.6%

Other 352,448 20.1% 561,029 25.4%

TOTAL 1,749,873 100.0% 2,209,860 100.0%

Source: IDC