One Year Ago: Sony 'Picture Book' To Feature Crusoe Chip

Sony Corp. (NYSE: SNE) will offer the first consumer product to include the much anticipated, power-saving Crusoe computer chip when the latest version of the Sony Picture Book hits stores next month.

The Picture Book is both a laptop computer and a digital video camera. With the new chip from Transmeta inside, the Picture Book will have twice the battery power and twice the memory at 128 megabytes.

"It's tailored toward the traveling business professional," said Sony's Mark Hanson. "Now they can fly coast to coast without having to look for another battery."

First announced to the public in January, the Crusoe chip was designed under a five-year veil of secrecy at Transmeta's Santa Clara, California headquarters.

The chip, which is named for the literary character Robinson Crusoe, enables software to perform functions previously performed by a computer's hardware. As a result, it generates less heat and consumes less power.

Waking up the Giants

After announcing what the chip could do, Transmeta drew the interest of a number of industry giants, including IBM (NYSE: IBM) , Gateway and America Online.

IBM is committed to coming out with a version of its ThinkPad series of laptops using the chip by the end of the year. Gateway plans to use the Crusoe in an Internet appliance it is developing with AOL that is scheduled to go on sale later this year for around US$500.

The 'Picture Book' Story

With a standard single battery, the Sony Picture Book is just over an inch thick, 9.8 inches wide and 2.2 pounds, with a battery life of from 2.5 to 5.5 hours. The unit sells for $2,299.

The device has a small, rotating digital camera on top of the display that can run up to 20 hours on a single charge, using an optional, $500 quad-battery.

Pressure on Intel

Analysts agree the Crusoe chip, combined with the success of the super-fast Athlon chip designed by Advanced Micro Devices (NYSE: AMD) (NYSE: AMD), could cut into Intel's (Nasdaq: INTC) global monopoly. Sony plans to release another laptop with an AMD chip later this year.

Sony has so far relied almost exclusively on chips made by Intel.

Still, Intel continues to dominate the corporate notebook market with as much as 90 percent of systems sold, according to Mercury research. Intel has manufacturing plants around the world, and reported 1999 revenues of $29.4 billion and a net income of $7.31 billion.

Intel recently released its own power-saving chips comparable to the Crusoe, such as the new version of its Pentium III, which consumes one watt of electricity.

Prominent Backers

Transmeta, which was founded in 1995, reported sales of just $5.07 million in 1999 and lost $41.1 million. However, it has the backing of several high-profile and prominent investors, including Sony, Gateway and Microsoft (Nasdaq: MSFT) co-founder Paul Allen.

In August, the company filed with regulators to raise some $200 million in an initial public offering.

Earlier this week, AMD filed with the U.S. Securities and Exchange Commission (SEC) to sell $1.5 billion in preferred and common stock, debt securities and equity and debt warrants, giving it the ability to raise $2 billion after SEC approval.