Gateway chooses Crusoe processor for AOL Web appliances

In a major endorsement of the new Crusoe processor architecture, Gateway

Computer announced it is developing a line of Web appliances around the

innovative Linux-based processor from start-up Transmeta. Gateway is buying an

initial quantity of 100,000 Crusoe chips at $70 per chip.

Gateway, which is the latest high-tech company to buy a stake in Transmeta,

is developing the Web machines in cooperation with America Online. The first

Gateway Web appliance will be designed for use in the kitchen. It will come with

a flat-panel monitor that can be put on a counter or attached to a wall. Gateway

spokesman John Spelich said the device would provide

"room-appropriate" functions like a calendar, family message board,

and a recipe collection along with AOL Internet access. It is expected to sell

for less than $500.

A second device will be a thin laptop with wireless Internet access for the

home. It is scheduled for release early next year. Spelich said the Transmeta

chip offered superior battery life, smaller size and lower operating

temperatures, critical factors in designing portable computing devices.

Gateway's new appliances will automatically run a customized version of AOL's

Internet service, and display Web pages, e-mail and personalized information.

The Transmeta processor was developed by former Sun Microsystems Sparc chip

designer David Ditzel with financial backing from Microsoft co-founder Paul

Allen and key OS software development support from Linus Torvalds, father of the

Linux operating system. To date, Transmeta has raised some $90 million start-up

capital. "At our launch in January, we promised Crusoe would usher in a new

world of mobility. With their innovative approach to Internet appliances for the

home, Gateway and AOL are playing a significant role in moving that vision

forward," Ditzel said.

Rather than the desktop computing market, Transmeta is targeting the Internet

appliance market, which is still in embryonic stage. These devices have the

potential of becoming a next-generation mainstream market as mobile devices and

computing appliances will eventually show up just about everywhere. With some 22

million online subscribers, Gateway and AOL believe they already have a large

captive market for the new Web appliances. "The technology Transmeta has is

very important, and it's the first one we've seen in a long time that seriously

challenges the Wintel duopoly,'' said Tim Bajarin, president of consulting firm

Creative Strategies Research International.