When the Axim is docked, ActiveSync 4.x:
• Uses TCP/IP to communicate via a generic NDIS driver.
• Assigns 169.254.2.1 as your Ax's IP (client).
• Assigns 169.254.2.2 as your PC's IP (host).
Here's one of the post mentioned.
It is not a problem. It is a design concept. Please search MSDN or MS KB for more details on security vulnerability w/ respect to AS4.x.