Transmeta cashes in its chips, eyes services, licensing

IDG News Service - Transmeta Corp. will cease production of all but a few of its low-power processors, shifting its focus to building new businesses around engineering services and intellectual property licensing, the company announced yesterday.
A new leader will oversee Transmeta's metamorphosis. Arthur Swift, previously vice president of marketing at the Santa Clara, Calif.-based company, was named president and CEO. Matthew Perry, the former CEO, has left the company, Swift said. Perry's departure wasn't explained, but Swift thanked him for his contributions to Transmeta.
As one of the few competitors against Intel Corp.'s dominance of the microprocessor industry, Transmeta has lost $650 million over the past five years trying to get its low-power notebook chips into the mass market. The company unveiled its unique software-based approach to instruction processing in 2000 amid the trappings of a classic dot-com-era company launch, but it never managed to translate the high expectations for its chips into profits.
Transmeta has stopped production of its original Crusoe processor as well as the 130-nanometer version of the second-generation Efficeon processor, Swift said. The company will continue to fulfill orders for 90-nanometer Efficeon processors through its manufacturing partner, Fujitsu Ltd., but those chips will be sold under new terms and conditions and in some cases will have significantly higher prices, he said.
Sony Corp. and Sony Computer Entertainment Inc. announced that about 100 Transmeta engineers will work with the companies on integrating Transmeta's LongRun2 power-saving technology into future products. Sony will pay "market rates" for the services of those engineers, who will help Sony produce derivatives of its Cell processor, Swift said. Cell is a multicore processor designed for Sony's upcoming PlayStation 3 gaming console, and development partners IBM and Toshiba Corp. are expected to seek out other applications for the chip as well.
Transmeta will also continue to seek license partners for its intellectual property, Swift said. It has already signed licensing deals with Sony, Fujitsu and NEC Electronics Corp. for LongRun2, which helps chip designers control power leakage in advanced processors.
"Our goal is to preserve and monetize our intellectual property, using products, services and licensing as the delivery vehicle for that intellectual property," Swift said.
As a result of its new business model, Transmeta was forced to lay off 67 employees, Swift said, cutting its total head count to 208 employees worldwide, he said. Most of the layoffs were in the sales, marketing and manufacturing departments.
Questions remain about whether Transmeta will continue to enhance the Efficeon processor and whether its software-based instruction processing design is up