Sales plummeted by 36.3 per cent over the previous quarter, and fell 40.6 per cent year-over-year.
IDC defines a handheld device as computer that offers the ability to synchronise with a computer. It does not offer telephony, but support for Bluetooth or Wi-Fi is optional.
Users also have to be able to install custom applications that make the device go beyond plain personal information management applications.
"Dell's exit from the handheld device market underscores the market's decline," said Ramon Llamas, research analyst with IDC's mobile device technology and trends team.
Llamas argued that handhelds are losing out to competition from converged mobile devices and smartphones.
"The growing popularity of converged mobile devices, combined with declining prices for laptop computers, have put tremendous pressure on the handheld device market," he said.
Dell announced last month that it would discontinue its line of Axim Pocket PCs, but is expected to keep shipping the units to clear out inventory.
Palm, meanwhile, has shifted focus to its line of Treo smartphones. The company launched its last handheld in late 2005, but has said that it will remain committed to the handheld market.
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