Drilling deeper into Torvalds's Transmeta
By Lawrence Aragon and Phil Harvey
Redherring.com
November 13, 1999
Super-secretive Transmeta is developing hand-held devices that demonstrate the power of a new-fangled microprocessor architecture, Redherring.com has learned.
(Rumour: The Co is burning through about $1 million a month, it's very expensive if you are in game to make Cheap Chip which run on free Linux OS? -M.E.)
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Drilling deeper into Torvalds's Transmeta
Since we published a story about Transmeta's plans Thursday, Redherring.com has gleaned even more revealing information about Transmeta, its product plans, and how its focus has changed over time. The company's ultimate aim is to overcome Intel's crushing grip on the chip market for mobile devices.
A Transmeta manager declined to comment, noting that the company's "policy is not to say anything until we have something to say."
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WORKING AROUND WINTEL
Redherring.com sources say the company is making a microprocessor for Internet appliances running the Linux operating system. It's a huge undertaking. With Transmeta's chip technology -- which translates software written for Intel's (Nasdaq: INTC) x86 architecture to Transmeta's native P95 architecture -- a handheld device would be able to run Windows CE applications without using Microsoft's (Nasdaq: MSFT) OS or Intel's chips. (For an in-depth look at Transmeta's technology, based on its patent filings, see Thursday's story.)
Transmeta executives are mulling whether Linus Torvalds, the company's pitchman, should flash a Transmeta-powered Web device as a proof of concept when he delivers his keynote speech at Comdex on Monday evening, a former hardware designer for Transmeta says. The company has not planned to make a detailed announcement about its vision and technology until mid-January.
Two Transmeta insiders say that the company is in discussions with Merrill Lynch (NYSE: MER) about arming Merrill's brokers with Transmeta-powered Web devices for use on trading floors. No contracts have been signed, the sources say. A spokeswoman for Merrill Lynch declined to comment.
Transmeta has also developed prototypes of other devices, including point-of-sale systems for use in supermarkets, a source close to the company says.
Beneath the burgeoning hype of Transmeta's secrecy are problems typical of a growing company with no products on the market. Between September 1998 and now, the company lost several hardware engineers, a former hardware designer says. Citing the fact that most of the company's technology innovation occurs in the software close to the chips, the source says, "There's a feeling that there's not really anything new to keep them interested."
But the media is rabidly interested in the company, largely because of its connection to Linux creator Linus Torvalds and a number of Sun Microsystems (Nasdaq: SUNW) executives and engineers who work at the company.
LINUX LOVE
Given the Linux/Sun connection, it's no wonder that the company is trying to find a market outside the world of Wintel.
Transmeta CEO David Ditzel "hails from Sun's Sparc group, so it's not too hard to see the attraction to Linus [Torvalds]," says Michael Feibus, principal analyst at market research firm Mercury Research. "For one, Dave's got a Unix background at Sun, so Linux is a natural fit for his past development bent. Given the low-cost nature of the hardware Transmeta is rumored to be developing, the nonexistent fees for Linux are a good match."
Leading the hardware and software groups at Transmeta is Doug Laird, who last year held the title of vice president of engineering for Transmeta. Roughly a year ago, Mr. Laird replaced Colin Hunter, Transmeta's former chief financial officer and head of software development. Mr. Hunter founded Hunter Software Systems -- a company that developed a way to automate porting DOS programs to Unix -- in 1986. That's a nice fit with Transmeta's vision of enabling devices to run Windows-based applications without Intel chips.
Mr. Hunter is still affiliated with Transmeta, but Redherring.com was unable to confirm his title.
BIG BLUES
IBM (NYSE: IBM), which helped fund Hunter Software Systems, is doing production work for Transmeta's chip, two sources say. The former hardware developer says that IBM even produced a Java compiler for Transmeta's P95 architecture.
But IBM was less interested in developing specific applications than it was in having the rights to a new way of emulating Intel's x86 architecture, sources say. The former Transmeta hardware designer says Transmeta's relationship with IBM "cooled" when Transmeta failed to deliver a chip that matched certain price and performance expectations.
"The further you move away from a cheapo clone, the more interesting it becomes from an applications perspective, but less interesting as a traditional partnership," says a Transmeta source.
Transmeta originally thought it could compete by developing microprocessors for high-end laptops. The company tried to build a chip that could achieve performance comparable to a 400-MHz Intel Pentium II, but that used just half the power needed to run Intel's chips. Transmeta, however, "severely underestimated the performance impact of their approach to running x86 applications," the hardware designer says.
HEY, WILMA!
In other words, he explains, versions of Transmeta's chip (two of them code-named for Fred and Wilma Flintstone) turned out to be better suited for Internet devices, since they don't require the same level of performance as a high-end laptop computer.
The other company source played down the shift in Transmeta's focus. "There was always an underlying feeling that this was a technology playing into a sea change," he says. "The question was which sea change they should address."
In the consumer market alone, technology research firm Forrester Research (Nasdaq: FORR) predicts that new Web devices, which will primarily appeal to heavy Net users, will reach 18 million households by 2003.
Transmeta, founded in 1996, is venture-backed by the Soros Funds, Institutional Venture Partners, Paul Allen's Vulcan Ventures, Bancboston Robertson Stephens, Integrated Capital Partners, and Bay View Ventures.
It's unclear how much Transmeta has in its war chest. As of July 1997, the company raised $21 million in three venture rounds, according to Venture Economics.
An inside source says that the company was burning through about $1 million a month and raised about $25 million earlier this year, giving it a valuation of about $250 million.
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