A bad omen for TMTA (Transmeta) IPO, set for next week...
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Thursday November 2 6:55 AM ET
IBM Scraps Transmeta Chip Plan
By MAY WONG, AP Technology Writer
SAN JOSE, Calif. (AP) - IBM Corp. has canceled plans to use an energy-saving chip manufactured by Transmeta Corp (news - web sites). in its upcoming laptop computers, deflating the upstart's balloon one week before it goes public.
IBM instead will continue using Intel chips - the Pentium III and Celeron - in its ultralight ThinkPads due to roll out in the fourth quarter, company spokesman Tim Blair said Wednesday. IBM said in June it would use Transmeta's low-powered Crusoe semiconductor.
``We'll continue to look at Transmeta for future products in the ThinkPad line, but at this point, for this product, we're not going to market with it right now,'' he said.
Blair would not say whether the decision was related to product performance, engineering problems or marketing issues, exacerbating the skepticism surrounding Transmeta's outlook before its scheduled Nov. 6 initial public offering.
``It certainly will put a cloud on Transmeta's plans,'' said Steve Kleynhans, an analyst with the Meta Group who follows the chip industry. ``People will wonder: 'What did IBM discover as they moved forward in developing a machine with this product?' It may have nothing to do with performance, but people will say, IBM is a smart company ... and people will infer that there's something negative about (Transmeta's) product.''
Transmeta downplayed the fallout of IBM's decision and said it remains confident in its growing list of customers.
Santa Clara, Calif.-based Transmeta unveiled its Crusoe chip in January after five years of highly secretive development. The chip's ``code-morphing'' technology is supposed to consume less power and give off less heat and thus extend the battery life for laptop computers.
Transmeta has been positioning itself to cut into the market share of Intel Corp.
IBM was among several laptop manufacturers at the PC Expo in June to show off a prototype using the Crusoe chip. Sony Corp., Fujitsu Ltd., and NEC Corp have each begun using Crusoe chips in the latest models of their ultralight laptops.
``IBM was the biggest feather in Transmeta's cap,'' Kleynhans said. ``To make up the volume it would have had with IBM, it would need two or three other computer makers, and they still wouldn't have the prestige of IBM.''
Of all the notebook makers that are taking a chance with the Crusoe chip, IBM would have had the biggest and farthest reach with mainstream consumers, said Linley Gwennap, principal industry analyst of the Linley Group.
``But the big issue is if this starts a trend, if other companies start backing out of their commitments with Transmeta, then there's a problem.''
Transmeta said it still has a good relationship with IBM, whose semiconductor division manufactures the Crusoe chip for Transmeta.
``We have seen that the companies providing the most innovation with Crusoe are focusing on the need for significantly extended battery life,'' said Transmeta spokesman Philip Bergman. ``Companies that are not extending battery life as a focus may look to other options. It's up to the needs of a particular customer.''
Bergman said he could not comment about the financial impact of IBM's decision because the company is in its pre-IPO quiet period.
The proposed offer price of Transmeta shares is between $11 and $13. |
