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Technology Stocks : Transmeta (TMTA)-The Monster That Could Slay Intel

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To: JH who wrote (383)5/14/2001 8:21:08 PM
From: Ron   of 421
 
Score one more for Transmeta.

A long-awaited Crusoe-based Web tablet is set to hit the market this week.

Sonicblue--the former graphics-chip company turned Internet-appliance maker--announced on
Monday that it began shipping ProGear, a wireless Internet tablet using Transmeta's Crusoe
TM3200 chip. Sonicblue (formerly known as S3) was one of the first companies to announce
plans to build a Transmeta-based device, shortly after the chipmaker emerged from stealth
mode in January 2000.

The company initially hoped to launch a consumer version of the Linux-based tablet but is
instead pitching the machine at hospitals and other niche markets. Cost is a big reason. The
unit, which resembles an Etch-A-Sketch, will be priced in the neighborhood of $1,500
depending on the configuration.

Ward Williams, director of product marketing for Sonicblue subsidiary Frontpath, said in an
interview that he and his colleagues spent about a month trying to find a business model that
would appeal to consumers, but to no avail.

"We were trying to invent new math," he said of the effort. "These are going to be expensive
just by their nature."

Williams said the company still hopes to bring the Web tablet to homes later in the year, but
for now ProGear is aimed at business users. For example, the company has started supplying
the units to hotels in New York and Chicago, which are renting them to guests.

The versions now on sale feature either a 6GB hard drive or 64MB of flash memory, along with
a 10.4-inch TFT screen, a 3- or 6-hour battery, 802.11B wireless networking, and USB and
PCMCIA expansion ports.

The Web tablet is one of a slew of new Transmeta-based products announced in recent weeks.

Toshiba announced its Libretto mini-notebook in Japan on May 6. A similar model is expected
to ship in North America in the third quarter of this year.

NEC also recently brought its Transmeta-based LaVie notebook to North America as the new
Versa Ultralight mini-notebook.

The Toshiba and NEC notebooks--based on the Crusoe TM 5600 chip--are aimed at the
corporate market. This gives Transmeta a foothold there against Intel.

The company has also made a foray into the server market. Start-up RLX selected the Crusoe
chip for its line of servers. Because of the chip's low power demand, the recently announced
servers can be packed more closely together than traditional Intel-based servers, RLX said.

The combination of the new notebooks and the server business will help Transmeta address
the lucrative corporate market. However, Intel will not willingly cede ground. The chip giant has
announced its own low-power Pentium III chips to match the Crusoe.

As a result, analysts don't believe Transmeta-based products will overwhelm the corporate
market--at least not right away.

"Intel has really been ratcheting up in response to AMD and Transmeta. So as a result its
position is stronger than it was six or nine months ago," Mike Feibus, principal analyst at
Mercury Research, said in a recent interview.

The company shipped about 150,000 Crusoe chips in 2000, according to Mercury, which
estimates Transmeta shipped about the same number in the first quarter of 2001 alone and
predicts it will have shipped about 1 million units by the end of the year.

Hoping to be more competitive, Transmeta will introduce a new TM 5800 chip later this year,
which it says will reduce power consumption by about 20 percent and raise clock speeds to as
high as 800MHz as the result of a newer 0.13-micron manufacturing process. Migrating from
one process to another, such as from 0.18 to 0.13, allows a chipmaker to increase clock
speed and reduce power consumption by printing smaller circuits on the chip.

Transmeta also plans to introduce a brand-new processor core in 2002 to help it become more
competitive with Intel. The new 256-bit core will offer additional performance by processing data
in larger chunks.

Staff writer John Spooner contributed to this report.
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