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By Tony Hallett, 16 October 1998 17:18

NEWS Some of the UK's top technology firms have expressed disappointment at their position in the stock market indices designed to make investing in high-tech companies easier. Psion and Videologic are just two companies unhappy with being classified as hardware vendors. FTSE International - the agency in charge of stock exchange indices - yesterday announced the new classification system, which will be phased in over the next nine months. Part of the restructuring involves the creation of a hardware index and a software and services index. The software index is divided into computer services, Internet and software categories, while the hardware classification includes computer hardware, semiconductor and telecoms companies. Psion's complaint seems to be straightforward. Although the company is well known as a manufacturer of handheld computers, it claims it is essentially an innovator which may ultimately profit more from its intellectual property rights - most notably those to its Epoc computer operating system - than from its manufacturing operations. A Psion spokesman told Silicon.com: "The world is changing, and a lot of the output of the IT world will increasingly be in terms of bits rather than atoms. And don't forget - we started out as a software company. That's where our roots are." However, FTSE International defended its decision. A spokesman said: "We consulted leading City analysts - three or four experts in the high-tech field and our 18 member committee. The groupings were calculated according to where the companies make their money now. Psion or any other company can write to us with their views and obviously there can be changes further down the line." Psion is not pushing to be categorised as just a software company, even though software ventures often do very well on exchanges the world over. It would prefer some kind of broader 'technology' classification. Eddy Collier, partner at Mercer Management Consultants, claims there is no easy answer. "There is such a blurring of traditional sector divisions these days that it's difficult to get the indices right. You'll always get complaints," he explained. Despite Psion's protests that it shouldn't be associated with the likes of Viglen or Dell, analysts are suggesting the groupings won't really affect market value. "The best money managers will read between the lines," Collier said.