Citidude and thread, more discussion re the Transmeta chip
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Transmeta Has a Neat New Chip, but Intel Has Fought Off Upstarts Before
By Marcy Burstiner
Senior Writer
1/20/00 9:32 PM ET
SAN FRANCISCO -- There hasn't been a buzz in the chip industry in years like the one surrounding secretive startup Transmeta.
No wonder. Here you have the software genius of Linux creator Linus Torvald, the financial backing of financier George Soros and the manufacturing capability of Big Blue (IBM :NYSE - news). And it's all wrapped up in a hush-hush company that's been working for four years to tear market share from evil Intel (INTC:Nasdaq - news) with a fast, low-power chip for portable computers. For the silicon crowd, that's about as sexy as it gets.
But Transmeta is by no means the first start-up to take on Intel. And in this game, so far no one has succeeded.
Remember Rise Technology, described by The Wall Street Journal in October 1998 as a "secretive" company working for four years to attack Intel with a high-performance chip that would consume less power? "Rise remains one of the most talked-about semiconductor start-ups around," the Journal reported at the time. Rise is still alive and selling chips, but has yet to take any piece of Intel's pie.
Three years ago former Dell Computer (DELL:Nasdaq - news) chief technology officer Glenn Henry attracted attention with his start-up, Centaur, which promised to take on Intel with, surprise, a low-cost, low-power, high-performance chip manufactured by IBM. It was eventually bought by Integrated Device Technology (IDTI:Nasdaq - news) and never managed to win more than a smidgen of the PC market. IDT sold Centaur last summer to Via Technology, which intends only to make ultra-cheap chips for the lowest end of the computer market.
But those companies didn't have Linus Torvald, the inventor of the open-source operating software that has acquired near-religious status throughout Silicon Valley. He joined Transmeta as a software programmer.
By all accounts Transmeta's chip is like no other. "I think it is a major scientific breakthrough," says Max Baron, a chip analyst for Cahner's In-Stat Group. But as for its commercial viability, that's another story. "In terms of the impact on the Intel world, that remains to be seen," he says. (Cahner's is not a consultant to Intel, Transmeta or Advanced Micro Devices (AMD:Nasdaq - news).)
In a press conference Wednesday, Transmeta unveiled its Crusoe microprocessor, a patented software that uses so-called code-morphing technology to be compatible with Intel's chips. According to Transmeta, Crusoe adjusts its operating speed and voltage to match the needs of an application's workload in order to extend battery life. It is considered a possible threat to both Intel and its rival AMD because the chips of both companies use a lot of power. Laptops using AMD or Intel chips cannot run all day on a battery, as Transmeta promises the Crusoe will do.
The hype around Transmeta is puzzling most people in the chip world. "It's not like someone invented a time machine or transporter," says Tom Halfhill, an analyst at MicroDesign Resources. "It's nifty but not anything radically new." (MicroDesign is not a consultant to Transmeta, Intel or AMD.) He noted that at the press conference held near Transmeta's Santa Clara, Calif., headquarters, company officials were visibly perturbed that fully half the questions from the press concerned Torvald's future software projects rather than the Crusoe chip.
On Wall Street, analysts didn't downgrade stocks out of fear of Transmeta. Credit Suisse First Boston analyst Charlie Glavin is sticking to his strong-buy rating on Intel. "Instead of Intel, which has competitive offerings and size, we believe Crusoe will pose more of a threat to the mobile products of AMD, Via Technology, National Semiconductor (NSM:NYSE - news), and low-end embedded processors," he wrote in a report Thursday. (First Boston is not an underwriter of Intel.) Investors, however, sold off shares of ARM Holdings (ARMHY:Nasdaq ADR - news), which has fallen 15% over the past two days. ARM licenses designs for chips used in many handheld computers, including those that use Intel's StrongArm processor. ARM chips consume less power than traditional Intel processors, but are not compatible.
What is nifty about Transmeta? It can translate different chip instructions, and that means it can do for hardware what Java did for software. That's important because most existing software is written for Intel chips. And as Finesse shampoo supposedly can tell how much moisture your hair needs, Transmeta can tell how much power a software application needs -- and raise or lower it accordingly. This will prolong the battery life of a laptop. It's a more elegant version of Intel's new Speedstep technology, which lowers battery consumption and chip speed on unplugged laptops but shoots up to high power when the portables are plugged in.
But whether Transmeta will have any better luck in the market than Rise or Centaur will depend on something else entirely: convincing manufacturers and then consumers that they want what Transmeta has. That will take marketing muscle.
If the heavy press coverage generated is any indication, Transmeta could be quite savvy in that regard. They have some strengths already. AMD and National offered chips that matched overall performance of an Intel chip, but they couldn't compete because they couldn't match the megahertz, the stated speed of the chip. That turned out to be the only factor consumers considered. A 700-MHz Transmeta chip -- a posted speed similar to the fasted Intel chips on the market -- can't actually match the speed of a 700 MHz Intel chip, taking into consideration the translation and power-consumption capabilities, says Halfhill. But the chip will say 700 MHz, and that gives consumers a reason to buy, he says.
The same goes with battery life. A Transmeta chip uses only one watt of power compared with 10 watts for an Intel chip, according to the privately held company. But that's not to say it has 10 times the battery life, Halfhill says. Still, one watt compared with 10 will mean less of a power drain, something consumers may like.
Transmeta officials couldn't be reached for comment Thursday.
The bottom line is that so far no one has been able to beat Intel in the PC market. Sure, AMD is now making headway. It only took the company three decades to build up its head of steam.
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