Sales of handheld devices worldwide in Q2 of 2006 saw the market decline for the tenth consecutive quarter according to a leading analyst group this week.

According to analyst IDC, a total of 2.9 million units were shipped during the period, compared to 3.7 million devices for the same period in 2005. In its Worldwide Handheld QView study, the analyst said 1.4 million devices were shipped in the second quarter, down 26.3 percent on the same period last year.

“The past 10 quarters have provided a combination of factors that have led to this milestone: the exit of vendors from the handheld market, the shift of vendor focus from handheld devices to converged mobile devices, and the increasing popularity of converged mobile devices overall,” said Ramon Llamas, research analyst with IDC’s mobile markets team, in a statement.

Palm held onto its lead position handhelds with shipments during the second quarter totalling more than the second and third manufacturers combined. Despite witnessing a year-over-year decline of 25.6 percent in shipments of devices, Palm shipped 475,000 devices in the second quarter, leaving it with 34.6 percent market share. The company also saw increased shipments of converged mobile devices during the quarter.

HP is at number two with double the numbers of third-placed vendor, Dell. HP shipped 260,000 units during the three-month period, a drop of 31.6 percent compared to the 380,000 sold during the same quarter last year.