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OBSERVERS WONDER IF IT WAS WORTH THE WAIT FOR TRANSMETA'S NEW CHIP

Last week, Transmeta Corp. finally took the wraps off a widely anticipated line of microprocessors it hopes will boost mobile computing by dramatically extending battery life and could ultimately let devices run operating systems originally written for different computer chips.

But observers said despite the impressive technology -- and an equally impressive executive team -- it's far from certain Transmeta can live up to its promise of revolutionizing the way microprocessors are designed.

At worst, Transmeta will end up the latest in a long line of challengers attempting to take away a piece of Intel Corp.'s market share -- currently estimated as more than 75 percent of the total market for microprocessors.

Transmeta's initial products and strategy are pretty straightforward. It hopes to take advantage of the chip's low power requirements and innovative "code morphing" software to fuel an explosion of mobile Internet devices that can access the Web using the same applications, operating systems and plug-ins that Intel's Pentium line of chips do.

Code morphing translates the instructions that direct the operation of Intel's processors into code the Crusoe chip can process very quickly.

But Transmeta's primary advantage -- and a powerful one in an era where laptops can run out of power after two hours -- is that the chips can operate using just 10 percent to 25 percent of the power that comparable chips from Intel or Advanced Micro Devices Inc. require.

"What we say is that if its mobile and it has a browser, it will use a Transmeta chip," said David Ditzel, CEO of the company.

That pitch was compelling enough for S3 Inc, at least.

The graphics chip company today intends to announce plans for a thin Internet access pad that will use the 400 MHz TM3120 Transmeta chip and the Linux operating system. The pad, still unnamed and with a price expected to be somewhere between $500 and $1,000, won't ship until later this year.

"We looked at another chip, but it just didn't meet our requirements for (Intel) compatibility, and low power," said Andrew Wolfe, chief technical officer for Santa Clara-based S3.

"We expect that this product will go all day," he added, although whether that day would be 8 hours or 12 will depend on the final design.

Transmeta spent five years developing the "Crusoe" chips under a veil of secrecy that only increased the product's buzz. The other member of the Crusoe family unveiled was the TM5400 processor, which is capable of running at 500 or 700 MHz, and targeted toward the more traditional laptop PC marketplace, where Microsoft Corp.'s Windows would be the OS of choice.

The TM3120 chips will sell for $65 and $89; the TM5400 will sell for $119 to $329. The pricing is roughly in line with that of Intel's Pentium line.

"I think it's a very impressive product," said Mario Morales, a semiconductor analyst for International Data Corp. "It addresses a key area in portables, which is low power (usage) and that's a hot market right now."

In fact, just the traditional portable market is already a $4 billion a year industry, noted Transmeta's vice president of marketing and sales, James Chapman, a veteran of both Intel and clone chip maker Cyrix Corp.

"Right now portables are 17 percent of the overall market, and we don't think that takes into account what the introduction of Crusoe could do in terms of growing that market."

Overall, the market for mobile Internet devices, from wireless phones to personal digital assistants to laptop computers, is expected to soar as they supplant traditional desktop computers as the primary means of accessing the Internet.

Even though Transmeta doesn't intend to address all of those markets -- it has no interest in cell phones, Chapman said -- that would provide the company with a significant market opportunity, if it can take advantage of it.

The company faced a mixed jury that was still searching for some answers after the announcement. Although much of the secrecy surrounding the company and its products was lifted, the company stayed silent on a number of key issues.

Transmeta, which according to one source received hundreds of millions in venture capital backing, demonstrated Crusoe's ability to shift between different operating environments on the fly, but wouldn't comment on whether they would actually introduce chips with that ability in the future.

Instead of comparing the performance of their processor running Windows or Linux head-to-head with Intel's mobile processor line, Transmeta suggested a new industry benchmark that would measure a combination of performance and power use.

And Transmeta declined to comment on who its partners were, except for a manufacturing agreement with IBM Microelectronics to produce the chips.

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