Handheld computer maker Psion announced today that it is refocusing its business on providing digital networking, and will be laying off 250 staff in the process.

The shake-up heralds a move away from producing handheld computers such as the Revo (pictured), and the scrapping of plans for Bluetooth devices, the company said in a statement.

The company will restructure its Psion Digital division to create products and services for wireless WANs (wide area networks) and wireless LANs (local area networks) aimed at the corporate and education markets.

Psion will, however, continue to develop its strategic investment in Symbian, the company which makes the Epoc handheld operating system, and which is jointly owned by Motorola, Nokia, Ericsson, Matsushita and Psion.

Psion blames the restructure on continually poor performance in a market that is completely saturated with handheld computer devices and mobile phones.

Furthermore, the company is pulling its Bluetooth PDA (personal digital assistant) and Bluetooth connectivity products. The move is due in part to what Psion calls a slower-than-anticipated establishment of a mass market for Bluetooth, the standard for short-distance wireless communications, or wireless PANs (personal area networks).

"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, vice president and analyst at Canalys.com.

"The 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. "Psion just hasn't released products that have caught the imagination of the buying public."

As for Psion's decision to pull out of the Bluetooth market, Welch didn't see the move as having any impact on the wider Bluetooth market. "It's going to take time [to develop the Bluetooth market], especially as we're into a more conservative time," Welch said.

In March, Psion announced that it had decided not to pursue a smartphone initiative and would lay off about 100 employees from that business unit to reduce costs. The company also stated at the time that it was merging its modem, computer and information media units into a single division called Psion Digital Solutions.