Seven years ago Transmeta (TMTA) was the buzz of Silicon Valley -- even though no one knew what the company was up to. Linus Torvalds had gone to work there, but the normally loquacious Finn had clammed up. While the secret was hardly of Watergate proportions, one trade magazine sent a reporter to stake out the company's parking lot. A mysterious ad campaign preceded Transmeta's first product launch in 2000.
The actual unveiling of the product was inevitably anticlimactic. The company's Crusoe family of microprocessors promised lower power consumption and heat generation, enabling the creation of laptops with longer battery life. Critics bashed the chips for being underpowered compared with Intel's latest and greatest. Transmeta struggled to find a market, and recently it sold off most of its chipmaking business for $15 million to Culturecom Holdings, a Hong Kong company better known for publishing comic books.
How did this come to pass? For starters, Intel (INTC) reacted rapidly and came up with its own power-sparing technologies, which are now in wide use. Transmeta's revenue dropped from $35.5 million in 2001 to $17.3 million in 2003, the year Torvalds left the company.
Transmeta's prospects don't look very bright now. The company's cash dropped by about $12 million in the most recent quarter; if it continues at that rate, Transmeta will be out of money in less than a year. (Its management claims that the cash burn rate will soon decrease to about $5 million a quarter.) But even if the company goes out of business, its ideas have left a mark on enterprise computing.
While Transmeta's low-power chips were initially targeted at laptops, they also found a market in blade servers. The attributes important in a mobile PC -- low power consumption and heat generation -- are even more vital in a dense rack of servers stacked one on top of the other in a crowded data center. This imperative is also driving the likes of AMD (AMD), IBM (IBM), Intel, and Sun (SUNW) to develop multicore chips.
Transmeta's influence may continue if the company manages to roll out a product based on its LongRun2 technology, which controls transistor leakage, the flow of current that occurs when a transistor is off. Transistor leakage has gotten progressively worse as chips have continued to shrink, and Intel's Andy Grove has cited it as a threat to Moore's Law. While Fujitsu, NEC, and Sony (SNE) have licensed LongRun2, none of the three has yet rolled out a product incorporating the technology. Transmeta's technology may not be able to extend the company's life span, but if it manages to extend that of Moore's Law, we'll all be indebted to the pioneering startup.