Transmeta Looks To Grow U.S. OEM Relationships

At the same time, the company is rolling out a series of new partnerships with technology and design companies as it hopes to infiltrate the U.S. marketplace as successfully as it has with OEMs in Asia.

"We've had a tremendous set of products in Japan," said David Ditzel, a co-founder and CTO of Transmeta, Santa Clara. "People were asking, 'When are you going to get your first big U.S. design win?' "

Ditzel said Hewlett-Packard's decision to use Crusoe processors in its Tablet PC rather than chips from industry giant Intel was a significant victory for the upstart and shows that Transmeta is a serious contender in growing areas of pervasive computing.

The HP design win was actually achieved first with Compaq Computer before the company merged with HP, Ditzel said. After the merger, the combined company decided to continue to move forward with a tablet based on Transmeta's,and not Intel's,processor.

"We had a lower power consumption on a 1GHz processor than Intel," Ditzel said. "Most of the tablets out there run on the 800MHz or 866MHz level. Gigahertz is an important marketing issue for people. We had it. Intel didn't."

The HP win, combined with the decision by blade server company RLX, Houston, to use Crusoe processors in some of its blade servers, has given Transmeta its first significant footing in the United States. However, Ditzel said the company would likely forgo any strategy to enter the largest market-share segment for either desktops or servers: the white-box arena.

"I think probably not in terms of a classical white box," Ditzel said. "We're going to leave that up to Intel and [Advanced Micro Devices]. What is exciting is the new and innovative space for desktops, notebooks and servers where we provide the kind of products,like quiet desktops,that are a lot thinner and take a lot less space."

Earlier this month, Transmeta announced new relationships with a series of systems designers and manufacturing companies that it believes will further extend its reach into the U.S. market. Transmeta executives said they believe this will be the start of a broader, more expansive sales channel for its products.

To date, though, Transmeta has not forged significant U.S. relationships with major distributors such as Tech Data or Ingram Micro.

It has, however, succeeded in winning an alliance with computer maker NEC on the manufacture of an NEC PowerMate eco desktop that runs on a 900MHz Crusoe processor. One large solution provider, CDW Computer Centers, Vernon Hills, Ill., is an authorized NEC dealer and carries the Crusoe-based desktops in its product lineup. CDW declined to comment on the success of the product to date.

Another Transmeta partner, IBM, has evaluated Crusoe processors for its line of BladeCenter blade servers. However, the computer giant has not yet opted to build blade systems based on Transmeta processors, believing that they lack the requisite performance sought by partners and customers, said Tim Dougherty, director of strategy for IBM's blade server line.

Ditzel, though, said Transmeta is close to launching its secondgeneration processor, the Astro, as part of its TM8000 line. Calling it a new chip with "significantly enhanced capabilities," he said the Astro processor will run eight instructions per clock cycle compared with the four instructions per clock cycle that most chips run today.

"It has potential for a lot more throughput," he said.

Like most companies, Transmeta is hoping its technology advances will translate into some good news on Wall Street. Since its high-profile IPO in late 2000, Transmeta's share price has been under extreme pressure.

Although its price of $1.30 per share last week was still higher than the 74 cents it registered as its 52-week low, it's still less than one-third of its 52-week high of $4.47 and a fraction of its all-time high of more than $40 per share.