Mystery Revealed

A woman dressed in black and wearing a beret stands in the corner of the amphitheater applying makeup to the faces of those about to take the stage. Executives from Transmeta shift nervously from foot to foot as the room fills with the 200 or so reporters and analysts attending the first press event in the history of this supersecret four-year-old company.

Transmeta is about to unveil its Crusoe line of microprocessors, named for the fictional shipwreck victim Robinson Crusoe. So the music playing over the sound system is decidedly tropical.

CEO David Ditzel takes to the stage and pulls a pair of prototype chips out of his pocket. A clot of photographers jumps up to capture the moment. Shutters click and flashes flare as Ditzel stands with a chip in each hand and a smile frozen on his face. CNN and ABC News are here in Saratoga, Calif. So are the Associated Press, Newsweek, NPR, USA Today, scads of business and trade press, and most of the country's major dailies.

"It's a three-satellite-dish event!" yells a reporter named David Peter, noting the three oversize satellite trucks rumbling in the parking lot. Peter, who writes for Co-op Computer News, holds a plate heavy with the breakfast treats Transmeta has laid out: mountains of fresh fruit, freshly squeezed juices, bagels and lox. "It's put up or shut up time," Peter yells to no one in particular between bites of smoked salmon.

The unveiling of a new microprocessor is rarely the stuff of media extravaganzas. But Transmeta isn't just any company. Investors include Microsoft cofounder Paul Allen and financier George Soros, and Ditzel is a highly regarded chip-world luminary. The biggest draw of all is Linus Torvalds, the creator of Linux, who left Finland to join Transmeta in early 1997.

The firm introduced its two new chips at the Villa Montalvo arts center - which features dark, carved woods, stained-glass windows, and a veranda offering grand views of the coastal mountains.

"No company I've ever dealt with has gone about announcing a chip in this manner," groused analyst Tom Halfhill the day before the event. Halfhill's from MicroDesign Resources in Sunnyvale, Calif., which publishes the Microprocessor Report newsletter. He seemed offended by the fuss over Crusoe.

"They've made this big point of keeping this a big surprise, which isn't at all the way any company I know of has done it," Halfhill huffed. "There were none of the preannouncement briefings with the trade press and analysts. We weren't briefed, and as far as I know no other analysts were prebriefed, which is highly irregular."

Despite those feelings, and a morning fog and roads that were slick from a persistent rain, Halfhill made the trek. He came for the same reason as everyone else: deep curiosity. For years, Transmeta has been the subject of intense scrutiny, a firm with an alluring pedigree that refused to say what it was doing. Without real information, the press and the analysts resorted to rumor-mongering. They all came to Villa Montalvo to finally get some facts.

Building a Mystery

The first time I heard someone mention Transmeta was in a Carl's Jr. in San Jose, Calif. That was two years ago at the monthly meeting of the Silicon Valley Linux Users Group, or LUG, long before most Wall Streeters had even heard of Linux. A rumor making the rounds among the local LUG nuts held that Torvalds was going to appear at that night's meeting as he had done a few months earlier. He didn't show, but his presence loomed just the same.

Transmeta had by that time recruited Torvalds to the Valley. Before and after the meeting, people milled about and speculated about the impact Transmeta would have. No one had a clue about what the company was doing - but they were sure it would be earth-shattering.

The company's Web site added to the mystery. Here is what it said: "This Web site does not yet exist." Hidden in the HTML code for the site was the message:

"There are no secret messages in the source code to this Web page." Fortune dubbed Torvalds a "person to watch" in 2000, citing his ties to Transmeta, though it knew nothing about what Transmeta might do. The Wall Street Journal ran an item when Ditzel confirmed Transmeta was about to remove the shroud of secrecy, as did the New York Times. The Los Angeles Times, Forbes, the Financial Times, and the San Jose Mercury News did likewise.

"Maybe that's the secret to getting the press interested in you: Refuse to say anything," said Carla Cook of Ketchum Thomas Public Relations, the agency handling Transmeta's PR, when the Transmeta launch was still a week away. "It seems the less you talk, the more people want to write about you."

Techies were curious, too. Prior to becoming CEO of Hiverworld, a small Berkeley, Calif.-based network security firm, Todd Andersen was one of a small band lobbying corporate America to embrace Linux as an alternative to Windows.

In that capacity, Andersen and several colleagues traveled to Transmeta to meet Torvalds. "You can bet all of us were peeking over the cubicle dividers to see what we could sniff out." Andersen says. "It was so radical, their silence."

Torvalds is a kind of geek saint. Search the Web and you can discover that his favorite beer is Guinness, that his daughters are named Patricia and Daniela, and that his middle name is Benedict. Since he joined Transmeta, a variety of Linux-oriented newsgroups, bulletin boards and Web sites have been floating theories about the firm - and the tech press was happy to recycle them. When Transmeta filed for a patent last year, Microprocessor Report ran an article that tried to read between the lines. Halfhill admits it was little more than an exercise in tea-leaf reading, but the demand for any scrap of intelligence was sufficiently great to justify the effort.

Keeping Quiet

Transmeta execs insist the decision to keep quiet wasn't part of any grand plan to generate buzz. "What it came down to was that we didn't believe you could really intro a new product like this with a piece of paper," says Transmeta's Frank Priscaro, a marketing executive. "If you're going to be a competitor of Intel's, you'd better have something more specific than some good ideas. We never imagined for a moment that being quiet all this time would work out so well from a public relations standpoint."

Priscaro advises other firms to learn from Transmeta's experience. "The lesson here for all those companies that feel they have to say something when the press calls is if you have a good idea, keep quiet until you've actually got a product to show for it."

Of course, Priscaro and his colleagues weren't exactly innocent bystanders - they kept the mystery alive. An interviewer would ask Torvalds about Transmeta, and he'd offer the kind of nonanswer ("We're doing something that no one has ever done before") sure to whet any reporter's appetite.

In a rare public appearance, Torvalds attracted a crowd of 7,000 to a speech at Comdex in November. He boasted that Transmeta had invented the world's first "smart" microprocessor, based as much on software breakthroughs as on innovative design. That statement cranked the rumor mill one notch higher.

Among other things, there was no clarity about Torvald's role. Transmeta is more than a hardware company - its core innovation is that it will rely more heavily on software bundled with each chip and less on instruction sets burned indelibly in silicon - but it's hardly a Linux-based company. One of the two chips Transmeta unveiled will operate using the Linux OS, but the firm spent far more time stressing that both chips are Windows-compatible. Tom Halfhill wonders if hiring Torvalds was more about PR than chip design.

"Why is a microprocessor company hiring Linus Torvalds?" Halfhill asked. "Why did they have to go all the way to Finland to hire a programmer? Was he hired because they wanted to hire the most talented programmer they could find to help with the software component of the chip? Or was it a strategy for gaining media attention?"

If that was the plan, it worked. When Torvalds came on stage to run a demo showing how well Quake ran on a Crusoe-powered laptop, the CNN cameraman jumped on stage to capture every mouse click.

Bad Rumors

Most of the speculation about Transmeta missed the mark. Consider the whispers that proclaimed the Crusoe the hardware equivalent of Java, able to run any and all operating systems. As it turned out, the company released two chips, one aimed at the laptop market, the other at mobile devices. The chips will run the Windows and Linux operating systems, but not Mac OS or Unix.

"If you look at a lot of the press we've been getting in the last few weeks, it's been almost all wrong," says Ed McKernan, Transmeta's marketing director.

"You'd keep on reading, 'Oh, they're doing stuff with cell phones,' or with PalmPilots. But the story we're telling here is that we're not looking at cell phones or PalmPilots, but a whole new class of appliances."

McKernan says he was pleasantly surprised to learn, when scanning the list of attendees, that four out of five reporters planning to attend the day's events represented either a business or general-interest magazine. Few understood the nuances of a presentation heavy on details like the size of the TM5400's L1 cache, or the advantages of integrating the North Bridge into the chip's main architecture. But everyone figured out the man wearing sandals and a Hard Rock Cafe shirt was Linus Torvalds.

In the end, of course, Transmeta needs to lure customers - and investors. In an era in which buzz can be far more valuable than a reliable revenue stream, Wall Street might be more impressed with the fact that Transmeta is all the rage than with the particulars of its chips. The company is selling itself not only to makers of laptops and Internet appliances, but also to consumers who might demand a Crusoe-based machine. That includes the legions who see Torvalds as a man who just might walk on water. It also includes those who tune in to CNN or ABC for the scoop on what is sure to be viewed as the first "hot new company" of the millennium.

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