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S3, Psion to partner on mobile Net products

Preparing a major co-marketing, co-development and technology sharing deal

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Former 3D graphics company and now information appliance specialist S3 has signed a co-marketing, co-development and technology sharing deal with Britain's PDA pioneer, Psion.

Actually, they haven't. What the pair have signed is an agreement to discuss signing a co-marketing, co-development and technology sharing agreement. As they put it: "Leveraging their complementary technologies, brands and channel geographies, the companies have agreed to examine a range of opportunities, including technology cross-licensing and joint product marketing."

However, since they also announced plans to ship their first joint product in October this year, we assume the final deal is really just a formality.

S3's alliance is with Psion Computers, the Psion subsidiary responsible for its Revo, and Series 3, 5 and 7 handhelds. Neither company is saying yet what the jointly-marketed product will be, but since S3 CEO Ken Potashner praised Psion's "strengths in handheld computing and wireless technology", some kind of mobile Net access device seems likely.

Psion has, of course, been developing and selling handheld systems for years, but has found itself of late superseded by young upstarts, most notably Palm. Even in the UK, Psion's heartland, Palm's marketshare exceeds that of Psion - they're at around 40 per cent and 30 per cent of the market, respectively.

Psion's EPOC operating system is likely to become very widespread, thanks to the company's decision to it hand over to the Symbian alliance with Nokia, Motorola, Ericsson and co. But any leverage Psion Computers hopes to gain through Symbian is likely to be balanced by the close connections Palm has with various alliance partners.

The deal with S3 should provide Psion with an entry into the low end of the consumer market, an area it's had a real job breaking into, largely thanks to the uncompetitive pricing of its own low-end models. Palm's consumer-oriented m100, for example, retails in the UK for around £149 - Psion's most basic Revo costs £250. Even Psion execs admit that few budget-conscious consumers, primarily young ones, are willing to spend that much.

And in a business ever more based on building up marketshare and mindshare by licensing technology to partners, the deal gives Psion a partner that other people have heard of - it's had licensees before, but they haven't survived (remember Geofox, anyone?)

Now we think about it, mobile phone giant Ericsson once licensed the Series 5 too, but it doesn't seem to have done much with it, and certainly when you think of Psion, you don't think of technology partners as you do when you consider Palm and Windows CE.

For its part, S3 gets a solid handheld computing platform that's pretty much ready to take advantage of emerging interest in wireless Net access - an area S3 is very keen to get into. We can imagine S3 looking at other alternatives - Windows CE? Too high end. PalmOS - licensing too pricey - and plumping for Psion because both companies need each other's help, and that makes for a financially advantageous deal.

The alliance is unlikely to build a platform as strong as Palm's but it's a start, and we eagerly await October's launch to see just what the two partners can come up with. ®

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