According to a recent report by Gartner, Microsoft has taken the top spot for the first time in handheld shipments. Microsoft's Windows CE has had a long lasting rivalry with the Palm OS which used to dominate the market a few years ago.

Shipments of handhelds that use Microsoft's Windows CE operating system rose by about 33 percent to about 1.4 million in the third quarter, compared with the same period last year. Meanwhile, shipments of handhelds that use the Palm operating system shrank by 26 percent to 851,000. Research In Motion showed huge growth, with shipments jumping more than 356 percent to 565,000 to round out the top three, the research company said.

PalmSource recently suffered the lost of tier one partner, Sony, whose Clie handhelds were acclaimed by innovation, accounting for approximately 1.2 million handhelds sold per year.

Overall, the PDA market rose by almost 14 percent from a year ago (3rd quarter), totaling some 11 million handhelds sold worldwide, compare that to about 13 million smartphones sold during that same period. Handheld sales have drifted downward since 2001 while Smartphones are expected to double its sales this year.