After 17 years, UK handheld-maker Psion is quitting the handheld market to focus on digital-networking products.

Psion - who invented the electronic organizer in 1984 - will lay off 250 employees and suffer restructuring costs of £29 million. In March, it merged its modem, computer and information media units into Psion Digital Solutions. It shed 100 jobs and lost £11 million in the process.

The company has also abandoned its planned Bluetooth products, blaming the technology's sluggish emergence.

The decision reflects Psion's poor performance in a market that's saturated with handheld devices, the company said. Chairman David Potter said: "It's essential we take the hardest approach to cutting costs."

Off the pace "This change has been coming for a while. Though Psion sales have been increasing, they have not been keeping pace with the general market," said Mike Welch, an analyst at Canalys.com.

"Demand in recent years has been for PDAs in tablet-form, like those sold by Palm and Compaq, whereas Psion's PDAs, like the Revo, feature small keyboards," Welch said, adding: "Psion just hasn't released products that have caught the imagination of the buying public."

Psion's Digital division will be restructured to provide networking products and services for the corporate and education markets. It will continue to "develop its strategic investment in Symbian," Psion said. The company holds a 28 per cent investment in Symbian. Joint investors include Motorola, Nokia, Ericsson and Matsushita.

Welch said: "The question is, if someone else needs to take the reins to promote Symbian. Perhaps someone like Nokia could get greater mind share for Symbian in part because it already has such massive consumer recognition for its own products."

Psion's revenues climbed 5 per cent in the first half of 2001 to £99 million compared to £94 million in the first half of 2000. Psion will announce its 2001 interim results on August 29.