6. Encountering the phone industry
The thinking behind the formation of Psion Software in mid 1996 is made clear in the mission statement that was publicised internally, at the very first “Team Briefing” for the employees of the newly formed company:
Mission statement: “To develop mobile computing technologies that anticipate markets in order to sustain our licensees’ competitive advantages”
The team brief listed “Four classes of opportunity”:
New palmtops – e.g. companies intent on entering Psion’s arena, such as LG
Competition killers – e.g. existing licensees of Geoworks, such as HP
Diversification – e.g. high-end camera manufacturers
Hype – e.g. anything with Web, Internet, or Browser
There is a surprising omission from the above list: any reference to the concept of “smartphone”. Readers may have noticed that the concept of smartphone likewise hardly makes any appearance in the previous three chapters of this book – except in brief forward-looking mentions. The idea of smartphones was far from being in the forefront of the minds of Psion executives.
What’s more, the potential licensees mentioned did not include any phone manufacturers. The reference to LG (subsequently a major phone manufacturer) was on account of a visit by LG to Psion in February 1996 – a visit mediated by ARM, in line with ARM’s interest in promoting the use of their chip architecture in new product lines. My diary for that day has the entry “Lucky Goldstar visiting”, using the name by which LG was commonly known prior to that time. The product lines under consideration during that visit were PDAs rather than phones or smartphones. (LG declined to pursue the opportunity further.)
In other words, the principal focus of the new company was expected to be devices similar to those already created by Psion. Most of the initial discussions with other potential licensees considered devices at least as large as the Psion Series 5 PDA, rather than anything smaller.
That’s why the team briefing had rounded off the above list of four classes of opportunity with the comment, “The first of these will more than keep us busy!”
However, by the end of 1996, the company had found a new focus – and was anticipating becoming even busier. So how did the focus of the company change? And what did we learn in the process?
First expectations of a market for smart phones
As early as January 1996, Stephen Randall had included “smart-phones” (spelt with a hyphen in that document) in a summary of potential emerging opportunities:
Predictions about the converging marketplace for palmtops, mobile phones and notebook computers are prone to media hype, but there is little doubt that these products will become more commonplace over the next five years…
Psion is fortunate that there are many existing and emerging opportunities that it can take advantage of, not only in its own market but in markets such as mobile communications where two-way paging, smart-phones and communicators will start to require intuitive graphical interfaces and powerful underlying technologies.
The installed base of cellular phones and pagers for example continues to rise and some of these products will converge with the type of products that Psion is experienced at designing.
These markets are destined to be significant over the next few years, not only in terms of volume but also in terms of influence and are therefore worthy of a high level of attention.
Stephen’s document gave an estimate for how the installed base of “cellular phones” would increase from 1995 to 1998 – from 58.3 million to 98.2 million. Alongside that estimate was a corresponding one for pagers: the installed base for pagers was projected to increase from 54.0 million to 96.1 million over the same time period. Stephen counselled as follows:
Psion should be cautious not to get caught up in the typical industry hype that surrounds some of these sectors, but sooner or later products in this converging arena will succeed. The company should seek relationships with companies that have the greatest commitment to seeding these markets.
[ SNIP ]
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