Slow GPRS rollout takes toll on Symbian

Symbian, the maker of an operating system for smartphones, will need more investment before it is able to make a profit, according to UK mobile data company Psion.

Psion, which created the EPOC operating system that Symbian was formed to develop, is also hoping to sell applications for Java-compatible mobile phones, many of which have been announced at this week's CeBIT trade show, and some of which run on the Symbian OS.

Announcing its year-end results on Thursday, Psion said goodbye to a year of disappointment and disaster in which it shut down its long-established handheld computing business, reshuffled executives, closed manufacturing plants and laid off workers. Psion Computers was particularly hit by the lack of new models to its range and by Motorola's withdrawal from a joint development project, and the company finally decided to exit the market it helped create.

"The last year was the most difficult and disappointing in our company's twenty-one year history," said Psion chairman David Potter in a statement. "Following aggressive expansion by the company in 2000, market conditions in the IT and wireless industries were severely depressed in 2001."

Psion's fortunes now lie mainly in Symbian and Psion Teklogix -- a maker of corporate data collection tools formed from Psion Enterprise and the acquisition of Teklogix International in the autumn of 2000.

Psion owns a stake in Symbian, which is jointly owned by several of the main mobile phone handset makers, and which is looking to embed its operating system in everything from standard handsets to sophisticated PDA-phones like Nokia's Communicator series. This strategy is much broader and more flexible than Symbian's initial focus on three smartphone form-factors.

While Symbian has announced a new verison of its operating system and several new licensees, however, its software has been slow getting off the blocks because of the sluggish growth of data-based wireless networks, Psion said. "With its strong range of licensees and increasing number of product announcements, Symbian is the clear leader for dedicated smartphone, wireless operating systems," Potter stated. "Nevertheless, until we see large volumes of smartphones using the Symbian OS established in the market, the realisation of our major investment in this area will remain uncertain... Symbian will require further funding before widespread volumes are achieved that will establish profitability and cash flow."

Symbian's chief executive of four years, Colly Myers, stepped down in February, to be replaced by Psion chief executive David Levin. In his turn Levin is to be replaced by Ian McElroy, chief executive of Psion Teklogix.

Other software vendors targeting smartphones have also had to rein in their plans while demand remains slack. Microsoft's Windows CE will power a smartphone from the UK's Sendo, for example, but the handset remains in the development stage until data-based GPRS networks are deemed more stable.

Psion may also benefit if the public takes to mobile phones that include Java, a technology from Sun Microsystems that allows a wide variety of devices to run the same software. Several manufacturers have recently announced European Java-based phones, touting their application and gaming capabilities, and Java handsets are also becoming established in Japan.

"(Psion) has nascent business developments in software applications for the burgeoning market in Java and smart programmable phones," Potter stated.

Psion said its Teklogix division is well established, with blue-chip clients like Volkswagen, Dell and Honda, but its target markets continue to be "subdued".

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