David’s Psion to face PC Goliath

By any normal calculation, David Potter’s Psion ought not to be with us today – still less poised for its greatest strategic breakthrough to date.

How is it that this tiny company – a David in a land of Goliaths – has time and again successfully defied market forces, when it seemed perched on the edge of extinction?

A capacity for focused innovation certainly forms part of the explanation. Psion, starting with its personal organiser back in 1984, has repeatedly been able to produce a successful niche product when it really mattered. More surprising, perhaps, has been the skilful timing of its launches and the deft exploitation of the products’ lifecycle. It’s not often, after all, that IT companies – however inventive – demonstrate shrewd consumer marketing skills.

Yet this is precisely where Potter has scored. More inventive than Alan Sugar but a better businessman than Sir Clive Sinclair, he has consistently kept ahead of his more powerful rivals by redefining the market just as they were closing for the kill.

A classic example of this was the original Psion personal organiser, which by the early Nineties had transmogrified into the Series 3, complete with spreadsheet and word processing software. Almost overnight, the ‘organiser’ gave way to the ‘handheld computer,’ a new, high margin sector, defined by Potter – and in which he soon confirmed his market leadership with the series 3a and 5.

To all intents and purposes the remarkable deal he has just struck with Nokia, Motorola and Ericsson – which account for about 80 per cent of global mobile phone production – is forged on the same anvil. Potter has now come under severe pressure in the handheld computer sector – as Psion’s recent profit warning revealed – from the likes of Sharp and Casio. But once again he has moved the game on, or rather redefined it.

The prize is to set the operating standard, just as Microsoft did with PCs, in the forthcoming generation of mobile digital products. Their main characteristics will be wireless connectivity, extreme miniaturisation and low cost. In effect, the ambition is to put a mobile office into the hands of the ordinary consumer – and see off Bill Gates and the PC.

A ludicrous daydream? Not if Psion’s soaring share-price is anything to go by. The City’s confidence seems to reside mainly in two facts: that the Psion new-generation standard, EPOC, is the only available alternative to Microsoft’s; and that the rest of the industry, of which the mobile phone manufacturers are a vital part, has no desire to be pushed about by a fresh Gates monopoly.

The resulting Symbian joint venture – in which Psion has a 40 per cent stake – is undoubtedly a brilliant pre-emptive move, which has pulled Potter’s chestnuts out of the fire just in time. But how much sleep Gates should be losing over this new challenge to PC technology remains to be seen.

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