Transmeta 'must diversify to survive'

Transmeta needs to clinch deals involving the use of its processors in high-end notebooks and internet access devices if it is to remain in business, according to a senior Gartner analyst.

Speaking at the Gartner Symposium/ITxpo, research director Kevin Knox said that Transmeta, which is targeting the ultra-light notebook space, won't survive in such a small segment of the market because microprocessor manufacturing is so expensive.

Transmeta, which is planning a stock market flotation before the end of the year, launched the Crusoe chip in Europe at the beginning of this year.

The US startup claims that Crusoe, which offloads onto software many of the functions traditionally performed by hardware, increases battery life in lightweight notebooks to eight hours, more than doubling the two to four hours provided by equivalent Intel chips.

However, Knox said that the jury was "still out on Transmeta about performance and battery life".

A manager from Toshiba, a leading notebook manufacturer, whom Knox said declined to be quoted, claimed that battery life using Crusoe was typically extended by only 50 per cent, and that there were performance issues with the chip on graphics-intensive operations such as streaming media or even Power Point presentations.

A Toshiba UK executive has previously gone on the record making similar claims.

Speaking more generally, Knox said that the "death of the PC" through the adoption of simpler devices, such as personal digital assistants, has been widely exaggerated, although he admitted that the priorities of buyers are changing.

He explained that there was a shift away from talking about the speed of processors or the size of hard drives to areas of differentiation such as software image stability, wireless connectivity and form-factor devices.

Talk of Linux on the desktop was receding in business circles because, according to Knox, "lower cost systems management, software distribution and image stability are not characteristics of Linux".

Applications for Linux, although growing, have not reached critical mass, he added.

Knox also said that the main area of interest now was in small form-factor PCs, such as Compaq's iPaq and Hewlett Packard's ePC, which reduce complexity particularly in support and total cost of ownership.

Gartner predicts that by 2003, 40 per cent of PCs shipped will be small form-factor devices as other vendors enter this segment of the market.