“You couldn’t do everything forever” — Sir David Potter
“I founded Psion in 1980 and ran it until 1999, when I stood back partly for health reasons. During those 20 years the company was a synonym for innovation — in hindsight we created an enormous amount — from developing and publishing software, to the earliest microcomputers.
Now, when you’ve been chairman and chief executive for so long, your successor has a problem. You need to stand back and play the role of the company chairman. The style changed a little bit. I would criticise myself that we had not developed sufficiently wider commercial management in the company.
We’d developed a concept and the hardware or software was really secondary, it was a vehicle.
By the mid-90s we were involved in four areas. Organisers and PDAs; we’d found a big corporate market for enterprise solutions for mobile communications; we’d developed three generations of operating systems — which in the longer term was going to merge with cellphones so we formed Symbian with Nokia, Ericsson, and that became an industry standard — and the fourth was communications.
Unfortunately, I think we closed our consumer electronics side — which I think was in hindsight wrong — in 2001.
So the company focused on Symbian and on the enterprise side. And because of what happened in the telecomms industry when it went through a very bad recession, if you remember, we weren’t able to ensure a balance of power in Symbian — because our shareholders and customers were the same. There was a conflict of interest, if you like. Unfortunately Motorola and Ericson were weakened by that while Nokia remained strong. There was concern whether the company could maintain not just market share but profitability for our shareholders as well.
Q: It’s always been very hard for British companies like Psion with our historically high interest rates, and a class of experts who say Britain must become a service economy. Did you feel you always got the support of the City of London at Psion?
I have several issues with your question — or at least the premise behind your question. We haven’t had high interest rates in Britain for 10 years, following the Bank of England’s independence.
I think what is true is that governments, Conservative and Labour, in contrast to say Germany, have followed the idea that a service industry is fine.
They haven’t said that in their speeches and their policy statements, but by the policy actions they’ve taken, that’s been the effect. For the last 25 years the manufacturing sector in Britain has declined massively. In fact it’s been declining for 50 years; from more than 50 per cent of employment in 1951 to 14 or 15 per cent.
Now in the global world we live in today that doesn’t necessarily mean you have to make things — we live in a complex outsourced world. Today Psion is still a manufacturer, but it does that with a lot of partnerships, in China and a lot of other countries around the world. But the service sector, and particularly the financial sector, has attracted huge numbers of very able and bright graduates, and there’s been very little strategic policy to encourage the other sectors in the country. In contrast to Germany and quite a lot of Europe.
It’s an Anglo thing, and I think it’s mistaken, because in the long run we need all these things. You need the ability to design and innovate and create the way you address markets. If you don’t control the design and innovation of those business processes — hardware and services and software — then you don’t really keep a hold on the ownership — and the realisation of where the profits and values comes back to. That’s been the failure of Britain.
“Britain lost its taste for commanding the heights of innovative new areas.”
To our credit we have a successful financial sector — but then you have to ask how long that is durable. And look at the very large current accounts defecit and ask whether that really can be filled by the financial sector alone. I would question that, but history will have to decide.
What’s really happened in our industry has been automation: robots have replaced people. If you make things like computers it’s automated by amazing technology, produced by companies like Siemens.
I would contrast how America has benefited, not so much from design but by its huge scale, and massive government investment in the defence industry. The science came from Europe in the 1920s and 1930s. It was America who eventually drove the technology because of the need for very light and powerful and robust electronics in the defence sector. That’s true of a lot of areas where America has been very strong.
So Britain lost its taste for commanding the heights of innovative new areas. You can look at a lot of the infrastructure in our country; we were building steam engines when the French were building electric trains following the war. Look at the railway systems France has now compared to ours. Other countries have picked up the pioneering great project.
Q: What consumer electronics could Psion have done if it hadn’t pulled out? You looked at digital radios, navigation, music, push email…
While Psion originated some of the concepts, it couldn’t have played in all of those markets.
The BlackBerry is the key one. The volume of BlackBerrys out there is tiny compared to Symbian — it has a base of more than 100 million units out there. What we and Nokia saw in telecomms was not this very small market of a limited number of executives, but a mass market of billions and billions of people. Something over two billion people. That is where the genes of Psion software is — in all the smartphones. That’s the high ground it has, and that’s its sucesss.
Q: But I can think of three. The digital radio, the iPod — 100 million- the SatNav system. Psion looked at all three, and only launched into one area.
You make your decisions and the world moves on. I think the issue on some of these areas was it was a question of whether we have the scale to deal with them across the world. It’s an error to try and compete on the sense of scale of the entire world if you don’t have that scale. It might be that our base in Britain and Europe wasn’t big enough, while Americans had the advantage, during that period, of a much wider market.
It’s also very difficult for outside companies, non-American companies, to break into that market — they’re very possessive of their own. There’s a networking effect in America. You can’t quote me many examples of European companies that can have really broken in and dominated in an IPR area…
Q: I can think of individual products — the Dyson?
That’s true. I think the world is changing. Lots of areas where it is different is the Japanese companies, who in many consumer electronic areas, dominate. The original science behind the LCD came from Britain, but it’s to their credit that Japan and more recently Korea have invested these giant sums in producing them. The LCD is a marvel of today’s world: a million cells on the screen and they all have to work — what an achievement. Especially when I think of the first Organisers.
Q: Do you wish you’d just stayed in that bit longer? One thing I noticed with Psion is it put in a lot of investment, and the first product wasn’t always that great. But it stuck in there, and the successor product — the Organiser II, the Series 3a — was the hit, and created a new market. With hindsight you didn’t reap the reward from those new 32bit platforms
Yes you’re right, you have got to evolve like that and learn from the market all the time. I’m a great believer in the market.
That’s to Steve Jobs’ credit when he came back, he did that with the iPod. He took the Walkman and synthesised the whole thing down — into a disc based machine with a great library of music.
Q. Psion investigated doing an iPod, too — a “PsiPod”. When you said you regretted withdrawing from consumer electronics too early — did you have that in mind?
One couldn’t do everything forever. You had to deal with the reality and move on.
Q. One thing I notice today, the engineering values were quite different to what we see now on the internet. Software is supposed to be a service today, but these Web 2.0 sites can barely stay up. Now this is quite a contrast with Psion, where you never lost any data, and there was this almost moral imperative to wring the performance out of every byte. Was that something you tried to engender — directly or through the hiring?
During that time memory was expensive, remember. We were obsessive at the beginning when memory was a few kilobytes and we were obsessive with the Series 5 when there were many, many megabytes. It was a necessity particularly in a small device.
Perhaps it had to do with the culture I engendered in the company, which was perhaps a sort of Calvinistic culture. We have a set of values — one was the passion in the products for the market; we had to put our energy, skill and commitment into making really great products.
The other was frugality — frugality in terms of how we engineered things. We did so with quality but not over-engineering, while cost was very important to our markets; It’s a fine balance.
Integrity was another of those core values. Integrity in engineering terms and in other ways. I think these were good values, and these are durable ones.
The core of the company really came from being contrarian — from not following the market wisdom. To be successful you need to be a bit contrarian. ®
Sir David Potter founded Psion in 1980, with £70,000 of his own capital; he resigned as CEO in 1999, but continues today as chairman. He is a non-executive director of the Bank of England.