Psion disconnects from product arm

Personal digital assistant vendor Psion is preparing to sell off its Connect peripherals division - formerly Psion Dacom - and is to find a specialist manufacturer to make its Connect products.

Personal digital assistant vendor Psion is preparing to sell off its Connect peripherals division - formerly Psion Dacom - and is to find a specialist manufacturer to make its Connect products.

The move follows Psion's £242m acquisition of Canadian software and wireless communications vendor Teklogix last week.

Psion has stressed it will not axe the division's 300 employees. Instead, it said the workers' jobs would be part of any negotiations, as happened when the company sold its Psion Computers arm to Flextronics last year.

Under that deal, no employees were laid off, said a source. "Psion has been looking to repeat the same move with Connect," the source added.

Psion is now negotiating with at least one possible buyer for Connect. The decision marks a change in strategy for Psion, which will move away from the high-volume, low-margin mobile products that Connect manufactures in favour of the more specialised local wireless integration skills that Teklogix offers.

Another source close to Psion said: "There are seasonal fluctuations with the Connect products. Demand is high around Christmas but low in the summer. Psion cannot afford to constantly invest in a technology that changes every 18 months, especially when it is not a core competence."

Speaking about the Teklogix move, Claes Bergstedt, commercial director at Psion, said: "The deal with Teklogix will give us a strong foothold in the US, which will increase the need for our products globally."

Bergstedt also confirmed Psion will be looking to expand Teklogix's operations in the UK. Mobile products such as Psion's handheld Workabout computers are expected to be rebranded with the Teklogix name.

Claire Pigget, marketing executive at Teklogix, said: "Psion is very keen to work with our range of industrial products, so I would expect to see some significant developments in those areas."

Meanwhile, Psion continued its march into the wireless market with plans to launch a £9.5m mobile services joint venture with United News and Media. This includes a £1.1m purchase of wireless application protocol portal, Fonedata.