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PDA Psioneer mulls licensing hardware, IP

Wound licking and navel gazing

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Psion is considering licensing hardware designs and other intellectual property, as it licks its chops after a bloody retreat from the consumer PDA market it pioneered.

Yesterday Psion put future plans for consumer PDAs on ice, sacked 250 of its 1300-odd staff, and announced a focus on the industrial and education niches.

"We could work with another manufacturer to produce some handheld device. It could be a home web tablet, or a viewing screen or a UI for a set-top box," Psionspokesman Peter Bancroft told us. "We'll still sell our WaveFinder digital radio. Remember that was created with a team of seven people."

Licensing intellectual property - for design, integration or simply Bluetooth expertise - remained an option, he told us.

That will bring little cheer to Psion PDA loyalists, who had been promised a Bluetooth Revo, shelved yesterday, and who were expecting an upgrade to the Psion 5 series last updated two years ago. Many 5MX users would settle for even the most basic updates; for example it only connects to a desktop via a serial connection, and serial ports are becoming scarce on many new PCs and have been extinct for years on new Macs.

But there was an explicit boost for the neglected netBook. The product will be upgraded with improvements to 802.11 wireless networking. And Psion wouldn't entirely withdraw from the high street, he said.

While Britain has been an incubator for ideas, another British manufacturer appears to be beating the retreat. Why was the climate so hostile to exporters, we wondered?

High interest rates - and Britain's have been twice as high as European rivals over the past twenty years - have a double whammy effect for manufacturers, as money itself is more expensive and keeps the exchange rate high, making exports more expensive.

Bancroft said that Psion's position as an exporter and erstwhile manufacturer would have been worse had it not bought Teklogix last year. Psion bought the Canadian company in a stock deal when Psion shares were still flying high.

"We were being crucified before the Teklogix deal, when the sterling exchange rate was around $1.65 to the pound," he said.

"We're not really a manufacturer now. But Teklogix gives us a natural hedge as they denominate in dollars."

Where now for standalone PDAs?
Psion made much of the fact that market leader Palm is struggling, and in his press statement yesterday CEO David Levin predicted that the commoditisation of the standalone PDA market will continue into next year.

This isn't sour grapes. It's pretty hard to take issue with Moore's Law, and Psion has been saying for several years that commoditization will shrink margins for standalone PDAs to the point where manufacturers can no longer justify premium prices, or support large R&D and marketing budgets. Once PDAs are falling out of Corn Flake packets, manufacturers need to do more than enhance the built-in address book every couple of years to justify a $500 sales tag.

It's a fact Microsoft recognizes too, and is gearing its PocketPC to being a playback device.

Psion started planning for this eventuality in the early 1990s, by turning the PDA into a phone. And while it caught the wave fairly spectacularly by signing up the world's biggest cellphone manufacturers to use its software, Psion the manufacturer couldn't paddle along fast enough. Levin yesterday blamed the slow take up Bluetooth, and diplomatically didn't mention, because I guess we all know, that Psion's own combined phone-PDA was canned in January when Motorola walked away from the Odin project.

Whether more capital investment would have made a difference to Psion, we can't say. But having a loyal partner would certainly have been useful. Psion showed mock-ups of a keyboard based communicator, much like the new Nokia 9210, last year, so we suspect it hadn't gambled absolutely everything on the Quartz Odin.

As it is, Psion's withdrawal from consumer PDAs means it has to punch its weight again. But it's a landmark event, as remarkable in its way as Sun withdrawing from the workstation business, or Cray from parallel processing.

Remarkable as it might sound to some of our younger readers, the PDA business wasn't born when John Sculley coined the term for the Apple Newton launch in 1993... ®

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