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Nokia – dooming Psion's legacy to obscurity?

Analysis It may well yet be Psion's legacy will be to provide the world with the most popular piece of technology ever, while others reap the reward, and the founders join the long list of forgotten British pioneers. It's too early to call that one.

But either way, the phase of Psion's adventure that began with the launch of its Organiser in 1985 ended yesterday, as the company cashed in on its former software division by selling its 31 per cent stake for a knock-down £135.7 million to Nokia. This is somewhat less than £1.6 billion valuation placed on Symbian several months ago and of course, a fraction of the £7-8 billion valuation placed on the company by analysts in August 2000, before the bubble burst.

That bubble at least allowed Psion to survive, however, as its sky-high share price at the time gave it the leverage to buy a steady, recession-proof business in the form of industrial equipment supplier Teklogix. But outside that honorable niche, Psion was already a holding company in all but name.

Psion had already abandoned its ambitions to become a world-class smartphone manufacturer itself. Two pieces of bad luck contributed to that three years ago.

In February 2001, Motorola abandoned a joint smartphone project (the Accompli 003, codenamed Odin) which would have brought a Psion product to market 18 months ahead of comparable offerings from Nokia, with features only now being introduced.

Psion then had two Bluetooth Revo PDAs primed to launch, thanks to its custom ASIC (with such world-beating features as MP3 decoding on the processor) before deciding it couldn't afford a costly retail launch into the still immature Bluetooth market. With that move, it effectively left the consumer PDA business.

But a rustle through the Register archives also reveals something we'd forgotten: something else that the two exits had in common. After each one, Psion vowed to fight on - looking for phone partners for Odin, and delaying, rather than canceling the Bluetooth Revos - but couldn't find the investment necessary. Another British company, ARM, has designed the most popular microprocessor architecture in the world, although only a handful of users are aware of the fact. But when even Skoda is a worldwide brand, of sorts; so why isn't Psion?

Find me a Partner

Over fifteen years, the company founded by two Zimbabwean intellectuals gathered together an extraordinary range of talent - recruiting heavily from the natural sciences and young staff from outside the IT industry - producing products that harnessed the best of British talent for improvisation.

Yet the company consistently failed to find either a partner or further injections of capital necessary to crack the US market. And for that some blame must be placed on the bias of British finance capital against manufacturers. (Another British pioneer, inventor
James Dyson
, has prospered while scaling down his global ambitions, although two years ago he was forced to move his manufacturing oversees because, in part, of overvalued sterling.)

But is Psion's legacy any safer in Nokia's hands?

Ever since Fall 2001, when Symbian quietly changed its mission statement (it later confirmed it was pulling out of UI design) and Nokia announced licensing of the former Symbian Pearl reference design to all-comers under the name Series 60, there has been little doubt who was running the show.

The consortium proved be a learning experience for all concerned. In the early days, a plethora of reference designs were floated, which were later whittled down to nine, then down to three (Pearl, Crystal and Quartz). Nokia took charge of two of these, with Ericsson sheparding the other. As devices neared market, behind the scenes arguments raged about code fix turnaround and eventually access to the source code itself. In the end it came down to investment.

Symbian itself never numbered more than 700 staff, of whom half were core developers, and half of those were working on the really important stuff. Nokia has 10,000 software engineers alone, and soon allayed any doubts about how important Symbian OS was to the company.

Speaking Volumes

Nokia has garnered an impressive number of applications for Series 60 in such a short time (it's less than eighteen months since the first phone became widely available) and it's the first option for developers when new applications such as VoIP, or multimedia games, are launched. (The first iteration of NGage may be a commercial flop, but it has captured the mind share of games developers who are assured their work isn't wasted, as the applications will run on future Series 60 in large volumes.)

And while Nokia could wish for more licensees for the platform, Sendo and Siemens have proved that it's possible to differentiate and innovate in terms of user interface design. That's something all parties know isn't possible with Microsoft's current licensing model, and an awful lot of work going down the Linux route.

But Nokia will need to do a lot of handholding to reassure SonyEricsson, a Symbian founder, that it isn't gaining an unfair advantage when the licensing fees come up for negotiation -p articularly at the old Ericsson lab in Ronneby, where UIQ (formerly Quartz) is developed, and which was transferred to Symbian shortly after the company was founded.

UIQ was often cited as the reason that Symbian wasn't just a Nokia subsidiary, and now Symbian will have to decide whether it is in the UI business. Cash-strapped SonyEricsson would love to take UIQ back in house but would need to justify the investment. (A spin-off of UIQ which would have seen a joint venture established with Motorola was cancelled after one of the latter's innumerable strategic sneezes).

Linux, OpenWave and a major disruptive shift (to 802.20) remain Nokia's biggest competitive threats here, and the global battle to watch here isn't between parts suppliers such as Symbian and PalmSource as much as it is between Sony and Nokia, the only two global consumer companies that set standards.

Microsoft now has competent offerings but neither manufacturers nor consumers seem to want to bite. Few OEMs want to accept the restrictive terms placed upon them by Redmond, and consumers simply don't see the Microsoft brand as a clincher. Perhaps Psion's lasting legacy is to remind us that outside markets where Microsoft maintains a sure monopoly, it's selling products to a world that doesn't feel bound by technological determinism. ®

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