Transmeta sees Japan as backdoor to US market

Transmeta Corp., the California-based low-power microprocessor designer, believes its fastest route into the U.S. portable computer market may be via Japan. The company, which just earlier this week announced its latest design win in Japan, is hoping to use the growing of its low-power microprocessor by Japanese portable computer makers as a backdoor into the competitive U.S. market.

"The marketing strategy has been basically win big in Japan with our Japanese partners and export that success to the U.S. through those partners," said James Chapman, executive vice president of marketing, in an interview. "Having success with Japanese companies puts us in a good position to partner with those companies to bring this type of technology to the U.S. market."

In many ways Japan is much more receptive to Transmeta's chips which boast low power consumption as their chief feature and thus find favor with portable computer makers. Among the first to ally with the California-based chip designer were Hitachi Ltd., NEC Corp. and Fujitsu Ltd. These three were later joined by Casio Computer Co. Ltd., Sony Corp. and Sharp Corp.

Transmeta's latest win with Japanese personal computer makers was announced earlier this week when Toshiba Corp., one of the world's largest makers of portable computers, announced a new version of its Libretto sub-notebook machine based on the Crusoe processor. Notebooks represent the strongest-growing segment of the Japanese PC market, and the sub-notebook sector, where many Transmeta-based machines can be found, is growing stronger still. Portable PC shipments beat those of desktops last year, for the first time, and sub-notebook shipments grew 48 percent to 1.4 million units, according to data released earlier this week by the Japan Electronics and Information Technology Industries Association. By contrast, shipments of sub-notebooks in the U.S. reached around 150,000 units last year, according to Chapman, who categorized them as a "very small segment" of the market.

"Quite frankly, it is being ignored by the major players," he said.

But this might be changing. A growing need for longer battery life -- Crusoe machines typically boast battery life at least double that of a standard notebook computer -- and portability is pushing some companies and their executives to reconsider these small, lightweight machines, said Chapman, who added he hope's Transmeta's strength in the sector in Japan will translate over to a similar position in the U.S.

"Currently Crusoe has a 60 percent market share (in the ultra-portable sector) and we are probably moving to a 80 percent share by the end of the year," said Chapman.

Transmeta is looking to Japanese rather than U.S. companies to get a foot in the door because Chapman believes their manufacturing system is more suited to making the small machines.

"In general, these (U.S. major computer) companies source most of their products from Taiwan and in terms of building this class of product, the Japanese technology is superior to the Taiwanese technology," he said. "From a supply line point of view, it's a little harder to build products like this."

Some of the major Japanese PC makers are already selling their Crusoe processor-based machines in the U.S. and others have plans to do so. NEC, Sony and Casio are already doing so while Toshiba said this week it will follow the Japanese launch of the new Libretto with U.S. and European launches.

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