Psion unnerved as Ericsson announces Microsoft link-up

SHARES IN Psion, the producer of personal organisers and mobile phone software, plunged by as much as 40 per cent at one stage yesterday after Ericsson, the Swedish telecoms equipment group, struck a strategic partnership with Microsoft to develop web browser and e-mail devices for mobile communications.

The partnership with Ericsson, the world's number three mobile handset manufacturer, helps Microsoft make up lost ground in developing services for mobile Net access devices. It challenges Symbian, a joint venture led by Psion, which includes Ericsson, Nokia and Motorola, which is developing mobile handset products around the UK company's EPOC operating system. Although the deal won't see Ericsson handsets run Microsoft's Windows CE operating system, it effectively underlines the software giant's determination to become a player in the burgeoning market for mobile services. Microsoft executives said last night that the focus is on improving user convenience, particularly in e-commerce applications.

Psion, which owns 29 per cent of Symbian, closed down 12 per cent at 2,638p after diving to a low of 1,800p - briefly cutting 40 per cent from its pounds 2.2bn market capitalisation. Although Ericsson stressed its commitment to Symbian, in which it holds a 21 per cent stake, the Microsoft pact poses the biggest challenge so far to Psion's lead in developing software for mobile devices.

"This is going to have a long-term impact on the wireless industry," said Ilkka Rauvola, analyst at Paribas. Just a year ago Bill Gates, in a Microsoft memo leaked to the US press, identified Psion as the biggest competitive threat to the software giant. Since then, Psion stock had risen seven-fold, and before yesterday's fall, had tripled in the past two months.

Microsoft acknowledged yesterday that Symbian remains a rival. "Symbian sees itself as developing competing operating systems to Microsoft," said a spokesman. "So, no, we don't plan on joining it - but things change over time."

Like other technology and Net stocks, Psion's market surge has been fuelled by sky-high future growth estimates. This is particularly true of the mobile sector, where wireless Net access, due to begin next year, is seen as the next growth wave.

Ericsson, along with Finnish arch-rival Nokia, has been a leader in wireless network infrastructure and in handset development. Drawing on its relationship with corporations, Microsoft wants to integrate mobile software systems to provide access to e-mail and schedules via corporate Intranet sites. "We think the strategic partnership fits very well with Microsoft's focus on providing information anytime, anywhere," said a spokesman.

With an estimated 1 billion mobile handsets expected to be sold over the next three years, analysts said Psion still has an exceptional opportunity. "Symbian is definitely a player," said Victor Basta, managing director of Broadview & Associates. "One announcement doesn't change that. These things happen when a market is in formation."

Ericsson also stressed that Symbian, as a basic operating system for next generation mobile phones, is not incompatible with its majority stake in the Microsoft joint venture. "Symbian is for a basic operating system," said Kurt Hellstrom, president of Ericsson. "Here we have an arrangement where we are integrating a web browser. They are different arrangements."

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

SThree: Talent Acquisition Consultant

£22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...

Day In a Page

John Palmer: 'Goldfinger' of British crime was murdered, say police

Murder of the Brink’s-MAT mastermind

'Goldfinger' of British crime's life ended in a blaze of bullets, say police
The Real Stories of Migrant Britain: An Algerian scientist adjusts to life working in a kebab shop

The Real Stories of Migrant Britain

An Algerian scientist struggles to adjust to her new life working in a Scottish kebab shop
Bodyworlds museum: Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy

Dying dream of Doctor Death

Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy
UK heatwave: Temperature reaches 39.8 degrees on Central Line - the sweatiest place in London

39.8 degrees recorded on Tube

There's hot (London) and too damn hot (the Underground). Simon Usborne braved the Central line to discover what its passengers suffer
Kitchens go hi-tech: From robot chefs to recipe-shopping apps, computerised cooking is coming

Computerised cooking is coming

From apps that automatically make shopping lists from your recipe books to smart ovens and robot chefs, Kevin Maney rounds up innovations to make your mouth water
Jessie Cave interview: The Harry Potter star has published a feminist collection of cartoons

Jessie Cave's feminist cartoons

The Harry Potter star tells Alice Jones how a one-night stand changed her life
Football Beyond Borders: Even the most distruptive pupils score at homework club

Education: Football Beyond Borders

Add football to an after-school homework club, and even the naughtiest boys can score
10 best barbecue books

Fire up the barbie: 10 best barbecue books

We've got Bibles to get you grilling and smoking like a true south American pro
Seifeddine Rezgui: What motivated a shy student to kill 38 holidaymakers in Tunisia?

Making of a killer

What motivated a shy student to kill 38 holidaymakers in Tunisia?
UK Heatwave: Temperatures on the tube are going to exceed the legal limit for transporting cattle

Just when you thought your commute couldn't get any worse...

Heatwave will see temperatures on the Tube exceed legal limit for transporting cattle
Exclusive - The Real Stories of Migrant Britain: Swapping Bucharest for London

The Real Stories of Migrant Britain

Meet the man who swapped Romania for the UK in a bid to provide for his family, only to discover that the home he left behind wasn't quite what it seemed
Cheaper energy on the way, but it's not all sunshine and rainbows

Cheaper energy on the way, but it's not all sunshine and rainbows

Solar power will help bring down electricity prices over the next five years, according to a new report. But it’s cheap imports of ‘dirty power’ that will lower them the most
Katy Perry prevented from buying California convent for $14.5m after nuns sell to local businesswoman instead

No grace of God for Katy Perry as sisters act to stop her buying convent

Archdiocese sues nuns who turned down star’s $14.5m because they don’t approve of her
Ajmer: The ancient Indian metropolis chosen to be a 'smart city' where residents would just be happy to have power and running water

Residents just want water and power in a city chosen to be a ‘smart’ metropolis

The Indian Government has launched an ambitious plan to transform 100 of its crumbling cities
Michael Fassbender in 'Macbeth': The Scottish play on film, from Welles to Cheggers

Something wicked?

Films of Macbeth don’t always end well - just ask Orson Welles... and Keith Chegwin