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Transmeta may power down chip making biz

Mulling IP-only operation

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Transmeta has decided to sit itself down and do some serious soul searching. The onetime darling of the chip industry may give up on much of its processor business and focus on selling its intellectual property instead, according to a company statement.

Transmeta issued the statement late Tuesday, saying "it will complete a critical evaluation of the economics of its current business model of designing, developing and selling x86-compatible microprocessor products, including its Crusoe and Efficeon families, in January 2005." This move isn't horribly surprising given Transmeta's struggles to produce large quantities of chips on time and given its constant financial woes. Still, Transmeta continues to enjoy a place in some of the most interesting computing products around, including thin clients, miniature laptops and even high-powered Linux workstations.

Transmeta garnered tons of hype when it first hit the processor scene. It promised to deliver an Intel-compatible chip that consumed far less power than standard processors. While Transmeta's technology often received positive reviews, it was never able to find a place in a high volume market.

"By modifying our business model to focus more on our licensing opportunities, leveraging our substantial IP portfolio and our R&D capabilities, we would expect to reduce our cash needs substantially and to improve our results for our shareholders," said Transmeta CEO Matt Perry.

Transmeta has already licensed some of its power consumption technology to NEC Electronics and Fujitsu. Asian companies have long embraced Transmeta's technology more than US computer makers.

"Transmeta is engaged in active discussions with various industry leaders to license its advanced power management technologies in 2005," the company said. "In addition, the company has entered into active discussions toward the potential licensing of other proprietary technologies, including its microprocessor designs."

Transmeta plans to hold a conference call on Jan. 21 to discuss it future processor aspirations.

No matter what happens to Transmeta and its technology, the company's impact on the computing industry will linger for some time. Intel publicly scoffed at Transmeta's technology but worked hard behind the scenes to counter its rival's customer wins and to develop more power efficient processors. Intel chips still lag those of Transmeta in performance per watt metrics, according to some data, but they have improved as a result of competitive pressure. ®

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