Communications group to take on Microsoft

The battle-lines for a new generation of wireless communications were drawn yesterday when Psion of Britain, Finland's Nokia, Ericsson of Sweden and Motorola of the US announced the formation of a joint venture company to develop products utilising Psion's computer operating system.

The move pitches the consortium against Microsoft, the US software group, which has developed a rival operating system, Windows CE, based on the Windows desktop software platform. Both systems are aimed at becoming the industry standard for a new generation of products expected to emerge from the convergence of the hand-held computer market - where Psion operates - and the mobile phone market.

Between them, Motorola, Nokia and Ericsson hold an 80 per cent share of the cellular phone equipment market. Analysts said the new joint-venture company, Symbian, puts Psion well ahead of Microsoft in the race to establish an industry standard.

Psion shares rose 50 per cent, despite a negative trading statement accompanying the announcement.

Most of the assets for Symbian will come from the former Psion software subsidiary, which was developing and licensing EPOC, the operating system used in Psion's hand-held computers. Symbian has been valued at £100 million sterling (£119 million). Psion will hold a 40 per cent interest, while the two Scandinavian groups have paid £57.5 million for their 30 per cent stakes.

Talks with Motorola, which joined the project at the last minute, are in progress to determine its contribution. Other equipment manufacturers are to be invited to join the venture. Mr David Potter, chairman of Psion, said: "We intend to set new standards for the mobile digital markets of tomorrow. The new generation of products will be ingenious and they'll be everywhere."

The three equipment groups intend to develop a range of mobile devices which will incorporate EPOC. These will include "smart" phones, which will be able to transmit and receive data at greater capacity and higher speeds than current devices, and more sophisticated paging devices.

Cellular technology will also be integrated into hand-held computers, enabling the transmission of electronic mail and other data from remote locations.