BRITISH HAND-HELD COMPUTERS MAKING WAY TO U.S. SHORES.

Byline: Glenn Rifkin The New York Times

It may seem to take hubris to enter a new technology market and compete against the likes of Hewlett-Packard, Apple Computer, Sharp Electronics and Motorola. But with little fanfare, Psion PLC, a company based in London that specializes in hand-held computers, has grabbed a lead in the $1 billion worldwide market for these $200 to $600 electronic organizers in the last few years.

Now Psion is pushing its way into the American market. In little more than a year, Psion has more than doubled the number of American retail stores selling its computers, to 2,800 from 1,200.

On Saturday, Psion began a $6 million advertising campaign, and it has dispatched a small army of sales support people to large retailers like Circuit City and Nobody Beats the Wiz.

``The word-of-mouth is terrific,'' said Richard Shaffer, president of Technologic Partners, a consulting firm in New York. ``They make a great product, which is what drives this market. They've gotten good reviews in the trade press, and they don't get many returns.''

Unlike its main competitors, Psion makes nothing but hand-held computers and has spent 15 years refining its software and hardware designs, starting with the first electronic organizers.

``We're purely focused on these devices,'' said David Potter, Psion's founder and chairman. ``We don't have to think about microwave ovens or fax machines. We have more resources focused on this area than even our biggest competitors, like Hewlett-Packard or Sharp.''

The machines start with $69 electronic address books and run up to palm-sized computers that sell for more than $1,000. The challenge facing Psion and its rivals is to persuade people to abandon their date books for something that costs more and has the potential to wipe out a lifetime of phone numbers if a battery dies.

Forrester Research, a technology research company in Cambridge, Mass., says Psion holds nearly 33 percent of the worldwide organizer market, just ahead of Hewlett-Packard's 200LX and brand new Omnigo, and far ahead of Sharp's Wizard and Zaurus and Apple Computer's Newton. Psion sales rose 48 percent in 1995, to $140 million, and profits increased 78 percent, to $18 million. And on the London Stock Exchange, the company's shares have more than tripled in the last year, closing Friday at 1095 pence.

Psion's presence in the United States remains small - just under 20 percent of its sales are here - but as the market for such organizers, known as personal digital assistants, or PDAs, searches for an identity, Psion has the opportunity to grab market share based on its reputation. Psion has 9 percent of the U.S. market, according to Forrester Research, trailing Hewlett-Packard, Apple and Sharp.

Despite its success, Psion faces a track filled with hurdles, not the least of which is competing in a market that remains ill-defined and fragmented. John Robb, an analyst with Forrester Research, said that early promises of sales rivaling those of PCs had failed to materialize.

``The upscale end of the PDA market hasn't found a true reason for existence yet,'' he said. Robb noted that only 500,000 such devices were sold in 1995 worldwide, and though the market is growing by 40 percent annually, it is not likely to become a significant sector until the organizers can be used for effective and cheap access to electronic mail and the Internet.

To that end, Psion has just introduced Psimail, a software package that allows users to connect to popular electronic mail packages through a cable and modem connection. But electronic mail access may not be enough.

Motorola, for example, sells the Envoy, which offers a pen-like device to give commands and a wireless radio modem for transmitting and receiving e-mail and files. The Envoy sells for about $1,000 and requires another $50 to $100 per month in phone charges to operate. Sales have been disappointing.

Despite the setbacks, there is no shortage of companies seeking to enter the competition. A new PDA called the Pilot One-Touch Organizer from U.S. Robotics, for example, has already attracted attention. The $299 device, shipped this month, offers connections to desktop computers, allowing files to be transferred easily between the two.

Mitchell Kertzman, the senior vice president of worldwide sales and marketing at Sybase Inc. and a gadget lover, said the Psion was ``the best-designed and most integrated'' of the organizers on the market. And he owns many of them.

Though 70 percent of Psion's sales are in Europe, the company's marketing director, Peter Norman, said Psion was focused on the United States for its growth. The company has set up an American headquarters in Concord, a suburb west of Boston.

In the United States, 35 percent of Psion's sales are going to corporate and industrial customers like Chrysler, Allied Signal, Dunkin Donuts and American Airlines, for customized applications like inventory control, route accounting and asset management.

To Europeans, Psion is no upstart. The company was founded in 1980 by Potter, a former computational physics professor. Potter had written software, including a successful flight simulator for one of the world's earliest personal computers, a machine made by Sinclair.

Psion actually created the electronic organizer market and gave the category its name when it introduced the $150 Organiser II in 1984.

The latest models are powerful computers with many of the capabilities of a far more expensive laptop or desktop system. The tiny computer has a 16-bit operating system that can run many applications simultaneously, plus two megabytes of random access memory, which can be increased to 10 megabytes, and a liquid crystal display screen.

Psion has sold more than two million of its products, including 750,000 of its current high-end $399 Series 3a models, a notable success in a market known mainly for the disappointment of the Apple Newton.

The Psion Series 3a machine employs a small but reasonably efficient keyboard. Normal touch typing is difficult, but two-fingered typing, often using the thumbs, can be mastered.

``I was tired of carrying a Daytimer and a laptop on business trips,'' said Norma Spreeman, who works for a San Francisco architectural company and bought a Psion six months ago. ``I can download pretty much everything I need onto the Psion and work from that.''

She did take issue with the machine's design, which she said she found less than user-friendly. If anything, it is too complex, with countless features and a daunting 300-page manual that has turned off more than a few users. ``It gets frustrating because I don't have the time to try to learn all these features,'' Spreeman said.

As Psion raises its profile in the United States, the competitor that causes most alarm, Potter said, is Microsoft, which he said had a development group with more than 200 people writing software applications for palm-top computers.

``It will be the software that really drives this market,'' he said, ``and Microsoft has the resources to be a key player in this segment.'' A spokesman for Microsoft acknowledged that the company was investigating the organizer market, but declined to provide details.

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Chart: THE WHOLE WORLD IN ITS HANDS

Global market share in1995 for multipurpose hand-held cmputers weighing less than two pounds.

The New York Times