Transmeta Wins Contract From HP

Upstart chip maker Transmeta Corp. edged out Intel Corp. and Advanced Micro Devices Inc. to provide microprocessors for Hewlett-Packard Co.’s new tablet-sized personal computer.

Due out this fall, the tablet PC will let users scribble directly on the screen and wirelessly share notes and files with other tablet users in the same room. Called the Compaq Evo Tablet PC, the device is expected to cost about $2,000 and use a version of Microsoft Corp.’s XP operating system designed for such devices.

With demand for PCs in the doldrums, companies such as HP and Microsoft are coming out with smaller, more powerful mobile devices in hopes they will reinvigorate sales.

Most analysts say it’s too soon to tell whether such inventions will take off.

“It’s hard to tell how well people will take to this,” said Tim Bajarin, president of Creative Strategies, a technology consulting firm in Campbell, Calif.

Bajarin said such devices already are used in manufacturing and health care to collect data but have yet to hit mainstream consumers.

Although Santa Clara, Calif.-based Transmeta and Palo Alto-based HP decline to specify how many tablet PCs they will make together, the contract is a coup for Transmeta, which posted a $171-million loss on revenue of $35.6 million last year.

“This will give Transmeta a new lease on life,” said Rob Enderle, an analyst with Giga Information Group Inc. “This makes them the predominant chip vendor for tablet PCs, where Intel is noticeably absent.”

HP chose Transmeta because the company’s chips are known for consuming less energy, thereby creating less heat and extending battery life, than those of its competitors, said HP spokesman Mike Hockey.

Transmeta shares rose 20 cents to $2.57 on Nasdaq. HP shares fell 24 cents to $18.85 on the New York Stock Exchange.