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What is it about Transmeta CEO Dave Ditzel that makes you want to believe him? Maybe it’s the way he unabashedly uses words like “cool” and “neat.” Maybe it’s because he had the audacity to build his upstart chip company within view of Intel headquarters. Maybe it’s because he never completes a sentence, so enthusiastic is he about Crusoe, his company’s brand of microprocessors. From last January, when Crusoe was announced in a blaze of fanfare, until mid-August, when the company filed to go public, Ditzel made himself hoarse pushing the Crusoe chip. Whether in front of 200 engineers or a single reporter, his message was unflagging: Crusoe-the Intel-compatible chip with one-tenth the power requirements of a Pentium III-is going to change the world of computing forever. “Crusoe is low-power, it’s compatible and it’s high-performance,” he said in one of a series of interviews held before the August filing. “That’s our mantra.”

This summer, the company and Ditzel went silent for the quiet period that follows every initial public offering. But by then the Crusoe message had developed a life of its own: Not since the Apple iMac had there been such a fuss in Silicon Valley like the one Crusoe has brought ashore. It’s no surprise that Valley insider rags Upside and Red Herring ran Transmeta as their cover stories last spring, but before the quiet period began, Ditzel was also quoted in Time, USA Today and a horde of other consumer publications. Transmeta’s publicity efforts have fed in part on the company’s hiring of Linux author and open-source software guru Linus Torvalds. Torvalds has been part of the software design team at Transmeta, and has lately been working on a version of Linux that will complement Crusoe’s application in the exploding market for mobile devices.

The IPO itself is a dour, close-mouthed document that reveals little of Transmeta’s future design plans, and is instead full of warnings about what might go wrong on Transmeta’s road to profitability. Indeed, as of this writing, not a single Crusoe product has shipped in appreciable volume. The company lost $41 million in 1999 and another $43 million in the first six months of 2000; the prospectus makes it clear that investors shouldn’t expect to see profitability in the near future.

But it would nevertheless be difficult to find a startup that began more auspiciously, or with a better lineup of initial customers. Last May, America Online and Gateway declared that Crusoe will power a new line of household appliances that will feature wireless Net access. IBM, Hitachi, NEC and Fujitsu followed suit in June, with announcements of Crusoe-based notebook PCs that will run all day on ordinary batteries. Sony followed with an announcement in August that Crusoe will power a future version of its Vaio PictureBook line of notebook computers. Not bad for a chip company with no fabrication plant and no track record-and whose main asset is, as Ditzel puts it, “a vision of a better way to build microprocessors.”

“Starting now, the Transmeta approach will be the smartest, quickest, cheapest, most reliable, most flexible technology to solve virtually any computing-related problem,” says John Wharton, microprocessor design consultant, Stanford professor, and former design engineer for Intel. “Fifty years ago, the most sophisticated systems were built using vacuum tubes. Ten years ago, the state of the art was complex, fully integrated megaprocessors like the Pentium and PowerPC. I see Transmeta as representing the next breakthrough in fundamental design technology.”

The trail that Transmeta is blazing will lead to chips that use significantly less electric power. That’s good news for anyone who uses a laptop computer or other portable electronic devices. But more profoundly, Transmeta has found a way to radically improve the ability of chip designers to make changes in their products without alienating the huge libraries of software that have been written to run on a particular piece of hardware. They have, in a sense, removed the pesky governor from the engine of chip-making progress.

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