Transmeta: Abandon chip?

Just last summer, everyone in the computer industry was talking about the Transmeta chip, called Crusoe. Now everybody's talking behind Transmeta's back.

Just last summer, everyone in the computer industry was talking about the Transmeta chip, called Crusoe. Now everybody's talking behind Transmeta's back. And Crusoe has been cast away by IBM and Dell, a fate strangely similar to its namesake, author Daniel Defoe's exasperated exile in Robinson Crusoe.

What accounts for this reversal in fortune?

Simply put, marketing and manufacturing miscues, combined with newfound competition, have left Crusoe stranded in a niche market, its prospects suddenly in doubt.

Is Crusoe a doomed castaway? Or will it be saved by mobile devices?YES

It wasn't supposed to be this way. After years of secrecy, Transmeta unveiled Crusoe in January 2000 to intense media interest. To a Wintel-weary world, the chip seemed revolutionary.

Then the hype machine cranked up, leading to a massive, successful IPO in November, at a time when other tech companies were crying out for a capital infusion from Wall Street. Companies like Hitachi, Casio, and Sony signed up to use the chip in computers, looking for a competitor to Intel that could provide processing power combined with frugal energy consumption.

After the honeymoon
"Transmeta has done a stunning marketing job, accentuating the positive that the Crusoe has great power-per-megahertz," says Joe Jones, CEO of BridgePoint Technical Manufacturing, an Austin, Texas–based semiconductor engineering and testing company. But savvy marketing couldn't steer the company clear of the shoals of economic reality. On the heels of Crusoe's debut, Intel and AMD announced that they were entering the fray, producing chips that consumed less power and were likewise software-centric in their design. Some speculate that's what scared off IBM and Dell.

Early reviews of Crusoe-based systems have been lukewarm at best, with astonishingly low performance outweighing any power savings. Other computer makers fretted, and the company's stock price, which had been in the 50s, took a plunge.

Now it seems that rather than displacing the Pentium in notebook computers, Transmeta must look for a less-competitive niche where it can thrive. "I think AMD and Intel can adjust some price points, bring out a few low-power options, point out that the actual performance-power ratio of the Crusoe is not superior, and close off [the laptop market]," Jones says.

Adds David L. Feldman, CEO of Palo Alto, California–based ZF Linux Devices, creator of the MachZ chip, a competitor to Crusoe: "It faces an uphill battle. It is never easy to depose a king [Intel]. I think there is great risk in going after the same market."

Where will Crusoe find a more hospitable home? There's plenty of speculation. No less an authority than Ed McKernan, director of product marketing at Transmeta, says the chip is "ideal for mobile devices."

Lightweight subnotebooks, handhelds, and embedded systems seem promising for the company. "The excitement surrounding Transmeta's Crusoe processor is due to the fact that it addresses a primary concern of mobile workers: battery longevity," says Nancy Crowe, director of marketing and communications at ViA, a Burnsville, Minnesota, maker of wearable computers that fancies the Crusoe. "Crusoe's ability to address this concern as well as provide the speed necessary to run many applications makes it a formidable player."

Whether the company can really get into the game before the money runs out remains to be seen.