Transmeta has confirmed it is engaged on "proprietary" design work for Microsoft, a revelation that will undoubtedly fuel speculation that the software giant is working on a mobile version of its Xbox 360 games console. In fact, it's more likely to relate to the shipping 360 product.

According to documents filed by Transmeta with the US Securities and Exchange Commission, the company signed a number of agreements with Microsoft almost a year ago, in May 2005. The processor instruction set emulation specialist put 30 engineers on the case, described as "a proprietary Microsoft project".

Naturally, Transmeta didn't reveal what the work involved, but it noted that it was "substantially completed" during the company's 2005 fiscal year.

With the Microsoft handheld rumoured to be in preparation for a 2007-08 launch, it seems likely that Transmeta's 2005 work centred on something else. We suggest Xbox 360's backward compatibility with the first-generation console is the most likely result of the two companies' partnership, as CPU instruction set translation is a Transmeta expertise.

Transmeta's SEC filing suggests it is still talking to Microsoft about future work, though it doesn't expect it to be as big a project as the work undertaken last year - regular or semi-regular updates to the Xbox emulation code, as promised by Microsoft, perhaps?

Xbox 360 is based on an IBM PowerPC chip akin to the G5 processor used on Apple's high-end desktops. IBM may well be working on G5-class CPUs that consume less power than the current versions, but they're unlikely to be suitable for a handheld, battery powered device. Other architectures are more suitable for handhelds, but they're incompatible with the Xbox 360 software and operating system. Transmeta's instruction translation technology could provide a way of squaring that circle, if not for the device's OS at least to allow it to run existing Xbox 360 games.

Interestingly, Transmeta has worked with Microsoft's console rival, Sony. However, this work will have centred on its LongRun 2 technology, which improves chips' power consumption characteristics by reducing current leakage. Transmeta licensed LongRun 2 to Sony in January 2005 and will have been followed up with service and support contracts. The likely focus of the work is the Cell processor. ®