Psion makes mobile phone pact

PSION, THE handheld computer maker, yesterday joined forces with the world's top three mobile phone manufacturers to challenge Microsoft in the fast-growing market for mobile computing.

Psion has injected its software arm into a venture with Ericsson and Nokia, the Scandinavian mobile phone suppliers. Motorola, the US manufacturer, will also take a stake after joining in the negotiations at the last minute.

The venture, to be called Symbian, will attempt to make Psion's operating software into the industry standard for use in mobile phones.

David Potter, Psion's chairman, said the number of mobile phone subscribers was expected to treble to 600 million by 2002. In addition, there will be increasing demand for "smart phones" which can connect to the Internet, send and receive e-mail, or handle on-line banking and shopping. Those devices would eventually dwarf the current market for desktop personal computers. Mr Potter said the deal would place Psion's software at the heart of that market. Symbian would licence the software to other manufacturers and help them develop new products, thereby turning the EPOC32 software - which is currently only used in Psion's Series 5 handheld computer - into an effective industry standard.

The deal was welcomed by analysts as a brave move for Psion, which had been struggling to maintain its position in the palmtop computer market in the face of an onslaught from cheaper models running Microsoft's stripped- down Windows CE operating software.

Although Psion had been attempting to licence its software to other users, it had previously only announced one licencee, the Dutch electronics group Philips. Observers also worried that it was unable to fund the development work needed to convert EPOC32 to other applications.

Analysts said the deal gave Psion's software huge credibility and placed the company at the heart of the developments in mobile computing.

It also allowed Psion to share some of the heavy R&D costs associated with its software arm. Nokia and Ericsson will inject pounds 40m into the joint venture while paying Psion pounds 20.5m. Although the terms of Motorola's involvement had not yet been calculated, the three mobile phone companies are expected to have 23 per cent each of the joint venture while Psion will have 31 per cent. The funds should cover the losses until licensing revenues begin to flow in a few years.

Colly Myers, the Psion chief executive who is taking over as chief executive of Symbian, said the company would charge $10 (pounds 6) for every software licence for a handheld computer and $5 (pounds 3) for every smartphone. The charges would apply equally to all the shareholders.

Symbian has already spoken to other potential licencees and is about to start a roadshow to sell the operating software to other operators.

Executives did not rule out floating the venture on the stock market once it was up and running.