Psion has dropped the production of its smartphone and will cut jobs after incurring £1.4m losses.

In January Motorola unexpectedly pulled out of the Odin joint venture to produce the smartphone. British PDA maker Psion has now decided it cannot produce the mobile independently.

“[We decided] that Psion is a computer company and not a phone company,” said head of Psion David Levin. This is standard corporate-speak for 'we can't afford to do what we pinned our hopes on'.

Levin emphasised Psion’s commitment to handheld computing, but the firm faces stiff competition from Palm, Handspring and makers of PDAs running Microsoft's Pocket PC system.

Around 20 percent of staff now face redundancy.