maikl: "the question is what failed: the OS or the hardware"
Psion is a frustrating example; another Acorn in a way. They created/defined a new market, ruled it for a while, and then collapsed in the face of a wide range of much inferior products. In the mid-90s, the Psion Series 3 and Series 5 machines were absolutely fantastic. I loved them, with their neat little keyboards and handy size.
I reckon that Psion's big mistake was to refuse to adopt colour screens. All the customers wanted them, but Psion claimed that they'd shorten battery life too much. Unfortunately, they shortened the company's life even more... If Psion had made some Series 5s with nice colour screens, people would have bought them, and probably wouldn't have cared much about the reduction in battery life compared with mono versions. Instead, Palm OS and Pocket PC devices came along with nice colour screens and killed off Psion's otherwise superior products.
The Psion Series 7 and NetBook showed that Psion could put colour screens in its computers if it really wanted to. Unfortunately, the Series 7 didn't fit too easily in the average jacket pocket. There was nothing wrong with either the OS or the hardware; it was a question of marketing strategy and a failure to give customers a whizzy feature that they repeatedly said that they very much wanted. I dare say there's more to it than that, but the screen must have been a big factor.