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Psion backtracks on consumer plans

Despite initial reports, the English company now denies it will completely abandon the consumer handheld market.

Despite initial reports, Psion is denying it will completely abandon the consumer handheld market.

The English company announced on Wednesday a new strategy of focusing solely on the business and education markets and on intellectual property rights. The company's restructuring, which includes 250 job cuts, will cost Psion $41 million.

On Thursday, senior Psion spokesman Peter Bancroft confirmed that Psion suspended plans to produce a Bluetooth-enabled handheld and will not continue to develop new consumer handhelds. But he emphasized that Psion is planning to continue selling and supporting its existing consumer handhelds, which include the Revo line.

"There will be more Psion consumer products in the future," Bancroft added.

He said the most likely candidate for a new consumer gadget actually is its Bluetooth-enabled handheld, which was at an advanced stage of development. Bluetooth is a short-range radio technology that allows portable devices to communicate within 30 feet of one another without wires.

With Bluetooth only slowly emerging into the mainstream market, Bancroft said, the company decided now was simply not the time to release it.

"There's no point launching...when there are very few other Bluetooth-enabled products available," Bancroft said. "If the Bluetooth market develops, then we'll probably either launch the device in partnership with another company or sell the intellectual property," he said.

At the same time, Bancroft acknowledged that shrinking profit margins mean it isn't necessarily worth braving the increasingly cutthroat competition in the consumer handheld market. "We've recognized that the convergence of the handheld computer and the mobile phone will result in a PC-type market, where the products are very similar and the margins are very tight," he said.

Instead, the company is concentrating on an area that it asserts offers better profits: its Teklogix division, which makes customized handheld devices for business customers.

Analysts say Psion's handhelds have been a victim of a change in the structure of the market, which has seen keyboard-based handhelds--in which Psion is the clear market leader in Western Europe--squeezed out by stylus-based models first popularized by Palm.

Staff writer Graeme Wearden reported from England.