Psion explores new avenues with Tekolgix

Buying Teklogix will pave the way for Psion to expand its industrial communications presence, Helen Knight reports.

Psion, the portable devices manufacturer, has revealed plans to significantly expand its reach into the industrial communications market. The announcement follows the £242m acquisition of Teklogix, a Canadian-based wireless data communications specialist.

The merger, completed last week, will create Psion Teklogix, the company’s largest division. Based in Ontario, the subsidiary will develop mobile technology for providing employees with access to corporate information at any time – whether at their desk, in the plant or at thecustomer’s site.

Ian McElroy, president and chief executive officer of the new division, says Psion’s expertise in making handheld devices forprofessionals, combined with Teklogix’s experience in industrial wireless systems, will mean the company is able to produce devices for use across an entire enterprise, from white-collar staff to shop-floor workers.

Although better known for its consumer products division, Psion has been manufacturing industrial products since its inception, through Psion Enterprise Computing. But the acquisition marks a significant expansion of this operation.

Teklogix had a revenue of £100m last year, while the figure for Psion Enterprise Computing was about £30m-£35m.

According to Claes Bergstedt, deputy managing director of Psion Teklogix, the acquisition gives Psion access to a network of offices across 20 countries. He insists the move will strengthen Psion’s hand, and does not herald the company’s departure from consumer products. ‘The merger gives us a good solid foundation in a cash-rich business,’ he says.

The overall business-to-business market is valued at about $2bn per year, and is expanding all the time.

Research by Symbian – a joint venture between Psion, Ericsson, Motorola, Matsushita and Nokia – suggests that by 2003 there will be 600 million phones worldwide, 50% of which will be wireless communication devices, such as Smart Phones.

‘We are seeing an explosion in mobile internet demand, in the adoption of devices and services for people on the move,’ says Bergstedt.

Unlike the short-term life cycle of the retail market, B2B products can take up to six months to start selling, Bergstedt says, but the sector is less volatile.

No jobs are expected to be lost as a result of the merger, since the two companies are not involved in the same product lines, channels or markets.

Instead, the acquisition will allow the company to extend its reach into other avenues and develop new sales opportunities, including a possible move into the educational technologymarket, Bergstedt says.

Psion has been looking to put its mobile devices in classrooms for some time but did not have the capability as a smaller operator. Psion will bring the skills and technology developed under the Symbian platform to the new partnership, while Teklogix has considerable expertise in Bluetooth technology.

‘It’s a synergistic acquisition, a case of one and one making three,’ Bergstedt adds.