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AMD to sell Transmeta chips in emerging markets

Advanced Micro Devices will sell Efficeon chips under the AMD brand for PCs in the Microsoft FlexGo project.

Six years ago, conspiracy theorists said that Advanced Micro Devices would link up with Transmeta, which specializes in energy-efficient chips--and, weirdly enough, it's finally happening.

AMD will sell Transmeta's Efficeon chips under the AMD brand for PCs in the . FlexGo PCs will be sold to consumers and small businesses in emerging markets such as Thailand and Brazil. Consumers don't have to pay the full price of the PC at the time of purchase; instead, they pay incremental amounts as they increase their use of the computer.

The Efficeon chips, which are cheaper than standard PC processors, are the only chips approved for the program. The metering code for running FlexGo is also incorporated into the processors. Because AMD has not yet adapted its chips to FlexGo, it's re-branding the Efficeon.

"Theirs is a very secure implementation because the code is on the chip," said Billy Edwards, senior vice president and chief innovation officer at AMD. "Over time we will put it into our chips."

Many in the PC industry see developing nations as the next growth market, largely because PC penetration is so low. In India, one of the more advanced emerging markets, there are only about 14 PCs for every 1,000 people, according to various estimates.

Citizens in these countries also quickly adapt to incorporating PCs into their lives. In Mali, radio stations with PCs sell e-mail services to villagers, who otherwise would have to endure long bus rides to speak to friends or business partners in neighboring towns. In India and Vietnam, villagers use computers to supplement school curriculums or to find out about agricultural price trends.

The alliance between the two companies is just one more step in the melodramatic history of Transmeta. The company burst onto the scene in 1999, promising to produce Intel-compatible processors that consumed less power than Intel or AMD chips.

Although it landed several deals with PC manufacturers, lagging performance and product delays quickly caused sales to decline. (Still, the company deserves credit for being one of the first to point out the looming power consumption crisis in computers).

Transmeta changed CEOs several times and then launched into a program to license its technology for curbing chip power consumption. Sony licensed the technology, and many predicted that AMD would--but it never did.

Transmeta then announced last year that it sold many of its chip designs to a Chinese company called Culture.com and that it would largely stop making chips, except to provide them to a few existing customers.

Now, with the AMD deal, Transmeta is signing up new customers. Fujitsu will manufacture the chips, but Transmeta will design them. AMD will handle the marketing.

AMD also sells a line of low-powered x86 chips, the Geode processor, which it acquired from National Semiconductor. It will continue to make these chips and include them in the Personal Internet Communicator, another computer for emerging market customers.

Currently, there are roughly five different visions for emerging market PCs: the $130 laptop promoted by Nicholas Negroponte; ruggedized PCs sponsored by Intel and Via; the PIC; Microsoft's FlexGo; and thin clients, sponsored by India's Novatium, among others.