SAN FRANCISCO (CNN/Money) -
Transmeta, the underdog processor maker, initially came into the public eye for...nothing. Back in the late '90s, all of Silicon Valley was aflutter with talk of the talent-stacked company featuring tech rock star Linus Torvalds.
Fanning these flames were mysterious, koan-like hidden messages such as "This Web page is not here yet!" which could be discovered by poking around in Transmeta.com's source code.
Then the company finally unveiled itself to great fanfare, went public in 2000, doubled its stock price on opening day, and then...nothing. Again.
Only this time, its Zen-like nothingness state was not the result of a cleverly crafted marketing campaign, but instead was due to a paucity of product wins, partnerships, and profits. Transmeta (TMTA: Research, Estimates), like much of the Valley, lost its cachet and watched as its stock price fell to the low single digits.
Worse for the company and its investors, Transmeta's entry into the processor market "awakened the sleeping giants of Intel and AMD," says Alan Promisel, an analyst with IDC. "Transmeta's been battered ever since." The company desperately needs to turn itself around; its cash position is looking pretty precarious.
Something to cheer about...at last
Last week, Transmeta finally gave investors something to cheer about. And cheer they did, sending the stock up 33 percent in one day, to a 52-week high. The news? Two product partnership wins.
First, Hewlett-Packard announced that it would be using Transmeta's Crusoe power-saving processor in some of its "thin-client" units. Thin clients are essentially stripped-down computers, either desktops or notebooks, that rely on servers for most of their applications and smarts.
| Recently in Tech Biz
|
|
|
|
|
"The dynamics of the thin-client market are ideal for our processor: efficient and low-cost," says Art Swift, a senior vice president for marketing at Transmeta. "Our goal over the next couple years is to be the leading processor supplier for the thin-client market."
Second, graphics-chip maker Nvidia announced that it would be supplying some of the chipsets for Transmeta's latest processor, Efficeon.
Both announcements were seen as a hard-won legitimization.
"It's a Good Housekeeping seal of approval for Transmeta," says Hans Mosesmann, managing director for SoundView Technology.
A little perspective
As with all things, however, perspective is key here. Though the HP deal is a big win for Transmeta, since it could act as a foot in the door to bigger and better deals, the thin-client market is tiny, accounting for approximately 1 percent of the overall computing market, according to Promisel.
What's more, HP has agreed to use the Crusoe chip (Transmeta's older model), not the new Efficeon chip that is set for public unveiling next month.
"Crusoe is not the chipset that's going to drive meaningful growth," says Mosesmann.
To continue this momentum, Transmeta must announce partnership wins for the Efficeon, and do it fast. Mosesmann says investors will likely become edgy if Efficeon partnerships aren't announced in the next few weeks.
Investors may get an important barometer reading this week, when the Computex trade show takes place in Taipei, Taiwan. Transmeta has seen some success in the Asian market, and with the Efficeon set to debut later this year, the show could prove a launching point for another round of product announcements.
One thing's for certain: These next few months will make or break Transmeta. The market has shown that it will reward strong partnerships. If the company is going to continue as an ongoing concern, we'll need to see more such alliances.
Sign up to receive the Tech Biz column by e-mail.
Plus, see more tech commentary and get the latest tech news.
|
