USS Clueless              Voyages of a restless mind

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Stardate 20011016.1320 (On Screen): A sure sign that an organization or company is in deep trouble is when you start seeing management churn in the top ranks. For example, back in the day one way to tell that IBM's OS/2 operating system was having problems was to observe the number of times over a period of a couple of years that new people were put in charge of the group. By my count, there were six people in charge of that product over a three year period. There are a couple of reasons why this can happen, and they're both bad. For one thing, it can be because higher management or the board of directors is unhappy with how things are going. Or it can be because someone who takes that job finds out what the situation really is and realizes that the job is a career-killer, a black stain on the resume. Also, any time there's a management shakeup, there's a drop in productivity and progress while the new team gets a grip. The ship steams in a circle for a while.

So it's unfortunate to see that happening to Transmeta, though not really all that surprising. For all their technical innovation, their primary products haven't really been competitive. They aren't bad, mind, but they don't make any kind of compelling case that would cause someone to prefer them over the alternatives from AMD or Intel or even from Via. And as an upstart trying to take marketshare, they can't just be as good; they truly have to be substantially better in order to compensate for the natural fear a customer would have of depending on an unknown whose future is insecure. So far they've only had one high profile design win. Sony incorporated a Crusoe into one of its laptops (a version of the "Picturebook"). But that's not enough, and the Transmeta has never been profitable.

The timing of this announcement is particularly revealing: Transmeta's most recent quarter ended 9/30; they should be announcing their financials for that quarter any time now. When the numbers are extremely dismal, a company will often make some sort of dramatic adjustment in the corporate structure just before making the announcement, in hopes of appeasing the stockholders with a "We're aware of the problem but we've done something about it" gesture, even if it's useless. Some companies will announce layoffs or organizational restructurings, but sacking top management is not unknown. I consider it a virtual certainty that Transmeta's numbers, when they're announced, will be dreadful indeed.

With boom times gone and the market for processors shrinking, and Intel and AMD locked in a price war, this is not a time to be small and not to have yet created a viable business; it can only get worse for them. I don't expect Transmeta to survive. (discuss)

Update 20011019: They were a disaster, alright.