British PC firm Tiny announced on Friday it is selling its ISP, Tiny Online, to Italian telco Tiscali for £8m.

The decision by Tiny Online to sell its ISP, which has almost 700,000 subscribers, may have come as surprise to many.

"This is not about the money. Sales are on the up," said Alison Boswell for Tiny. "We are going to concentrate on the retail side of the business hopefully allowing us to break into new markets [with new products]." Tiny has not yet specified what these new products will be.

Existing Tiny Online customers will not immediately be affected by the take over, as the service and prices will for now remain the same. But Tiscali has promised it will introduce new services, although no details have been finalised. Tiscali already has over 16 million subscribers.

"We are looking forward to offering Tiny Online subscribers innovative tailor-made content and competitive access packages," said Sergi Cellini, chief executive of Tiscali UK.

"In online terms its a good time to sell. Medium-sized sites are going to find it more difficult to compete with the big boys in the long term," said Boswell. "Tiscali will probably be able to offer cheaper internet packages in the long run."

IDC Analyst Andy Brown believes this is another part of Tiny's strategy to break out beyond the desktop PC into mobile products, such as PDAs.

"This is a way of manoeuvring into new markets," said Brown. "PC sales at the moment are dire across the board. The market will bounce back but shows no signs of doing so before the end of the year."

Despite Tiny's insistence that the sale was not just for the money, the extra funds will help it survive the slump in the PC market.

IDC is a member of the IDG group of companies, as is PC Advisor.