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November 26, 2009

No iPhone envy for Psion CEO

Right to get out of consumer space; fight with Apple, RIM unlikely

By Steve Evans

The CEO of mobile computer veteran Psion has told CBR that he is not jealous of the success of Apple’s iPhone and RIM’s BlackBerry smartphones, and thinks that the company was right to get out of the consumer market when it did.

Psion was one of the early champions of mobile computing through its Psion Organiser range of handheld devices, released during the 1980s and developed throughout the late 80s and 90s. The Series 5, released in 1999, featured a slide-out keyboard and touchscreen. The Series also featured the EPOC operating system, which has since developed into the open source Symbian OS.

The threat from the likes of the Palm Pilot saw Psion struggle during the late 1990s and the Series 5 proved to be the last consumer device released by the firm. Psion now concentrates on rugged mobile computers through its Teklogix division.

CEO John Conoley, who took the reigns at Psion in April 2008, told CBR that the company exited the consumer market at the right time. “If the company had not got out when it did, we would now be severely threatened from Apple et al. The company made a conscious decision to move away from the consumer market,” Conoley told CBR.

Conoley ruled out a return to the consumer space but did say that the company can learn from it when it comes to design and aesthetics. “Just because they are rugged products, why not make them look good?,” he asked. “The iPod was a fantastic retail experience, it was such as desirable thing. We can look to the consumer space for that.”

Since his arrival at the firm Conoley has overseen a major restructuring, which involved replacing the entire management team and reducing the headcount at Psion by a third. The changes have prompted cost cuts of £46m.

“Companies only ever go right or wrong from the top, not from the bottom,” he said. “A new management team brings fresh dynamics and I needed a team that was on board. We’ve also clamped down on unnecessary travel and reduced freight costs from about 4% of revenue to 2%.”

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Making company-wide changes during a recession actually helped Conoley achieve his aims, he believes. “We completely reorganised the company from a countries-based structure with lots of duplication to a centrally-driven one with one person responsible for supply chain or freight or stock around the world,” he said.

“The recession helped with “why” we had to make such significant changes to the structure. People don’t instinctively like change and Psion hadn’t seen much change over the last few years. The company had accepted that making 3% operating profit was good and it didn’t believe it could do more. The recession made people get real,” he said.

Psion now focuses on rugged mobile computers for a variety of industries, including ports, airports, automotive and warehouse and distribution. This brings it into competition with Motorola and Intermec, and Conoley says that going up against a company of Motorola’s size means Psion has to approach the market differently.

“We can’t outspend Motorola on R&D, so we need to compete on a different basis,” he said. “We’re keen on customer intimacy and our customers really like working with us. We are also very flexible and much more willing to bend the product out of shape to meet a certain need. You can’t really do that as a bigger company because you can’t have too much product selection.”

Being more flexible does however make product development more complex, which is why Conoley is introducing a platform model at the company. “The development process we’ve gone to means that about 70% of the parts can be used across a number of products. This means that we can add hundreds of product variants for fewer parts or part assemblies,” he said.

Conoley believes that this method could help close the gap on Motorola. “Although we can’t compete with them on R&D, by halving our time to market that is like doubling the amount we spend on R&D. To me, that’s innovation. That’s where we can really win or lose.”



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