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Thursday, 1 March, 2001, 12:36 GMT
Psion fails to live up to promise
Psion Revo
Psion: Promising much but failing to deliver
By the BBC's John Moylan

Just months ago Psion was in the FTSE 100 and basking in the glow of the high tech share boom.

Since then it has been one of the leading British victims of the technology company rout, with its shares falling more than 90%.

And as the company unveils full year results, it faces serious questions about its future.

The headline news looks bad with the collapse of a major project, job losses and product delays, but Psion is a company in the midst of huge change - the question is does it still have its finger on the technology pulse?

Motorola aftermath

Psion's fall from grace has been swift. In January came the shock news that its ODIN joint venture with Motorola was over.

The plan was to produce the first fully integrated mobile phone-cum-organiser.

The first product was due within months, but the company has confirmed that, while it is still looking for another partner, it would not continue the project alone.

The news is a major setback for Psion, which seemed ideally placed to take advantage of the convergence between mobile telephony and computing.

Handheld devices

Sales of Psion's core handheld products - the Series 5 and Revo - have been under pressure too.

Last year the company sold half a million units, but Psion's Chief Executive David Levin is still confident, claiming that when a company has a 65% increase in revenues it doesn't sound like the market is turning its back on the product.

However, sales of competitor devices like the Palm Pilot have soared while Psion still struggles to make inroads in the US market.

Technology Analyst Philip Smith at Teather & Greenwood is less convinced.

"We believe the handheld business will come under increased competitive threat and that will drive down margins".

Some claim Psion should exit the handheld market altogether, but Mr Levin has confirmed the company's commitment.

He says its products would be highly differentiated from its competitors but would remain mass market.

He highlights Psion's plans to launch its first organiser featuring Bluetooth wireless technology this year.

Restructuring

With the collapse of the ODIN project, Psion is again restructuring.

It is merging its handheld computers, modems and digital radio divisions to take advantage of core skills common to all.

The new Division - called Psion Digital Solutions - will result in 100 job cuts, roughly a fifth of the current staff in this area and will cut costs.

Symbian

For Psion much now hangs on the success of Symbian.

It has a 28% stake in the venture with Nokia, Ericsson, Motorola and Matsushita to develop operating systems for mobile phones. The group recently signed up Siemens as a licensee - giving it the world's top 5 mobile phone makers.

But Psion has confirmed that the delays to the roll out of GPRS mobile phone technology means Symbian based products will come to the market late, impacting on volumes and revenues.

The signalled float of Symbian - which some have valued at £5bn - may now have to wait until next year.

Symbian's EPOC operating system still looks like the de-facto operating system of choice for next generation internet capable phones, but sector watchers have noted that some of the Symbian partners have embarked on projects with Microsoft and Palm.

Teklogix

Less well known but of key importance to Psion is its Teklogix business which supplies wireless systems to businesses.

Psion used its buoyant share price last summer for the £250m acquisition of the Canadian company.

It already accounts for 45% of Psion's revenues and a much higher percentage of profits.

Viewed as the number two company in a fast growing sector - Teklogix could help steady Psion during a period of uncertainty.

The future

So where does all of this leave the once bright hope of Britain¿s technology sector?

Few doubt its expertise in wireless technology.

Several PC manufacturers have signed up to use its Bluetooth modem products. Its Teklogix business looks robust.

And with Symbian it appears to have a stake in the operating system which could dominate wireless devices in the years to come.

But some believe the company missed a huge opportunity in the consumer handheld computer market.

The failed venture with Motorola has raised questions about its ability to execute projects.

Psion promises much but right now is failing to deliver.

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