Compaq Computer is the latest large computer manufacturer to pass over Transmeta's Crusoe processor -- at least for now. ZDNet News sources confirmed reports that the Houston PC maker's Commercial PC Group has passed on Crusoe. Sources said the PC Group will utilise forthcoming low-power Pentium III chips from Intel. IBM said last week it was postponing plans for a Transmeta-based portable. Compaq's PC group had been working to design Crusoe into a model in its Armada line of notebook PCs, sources said. Compaq officials, however, wouldn't comment specifically on using Crusoe in the Armada line. "We have and will continue to assess the Transmeta (Crusoe) processor for use in future products," said Compaq spokesman Mike Hockey. "This isn't a big deal. Neither was IBM and neither are any of the current design wins," said Mike Feibus, principal analyst Mercury Research, of Transmeta's ups and downs. "The problem is not that Transmeta is not in Armada or ThinkPad -- it's that these experiments by PC makers are being overblown as design wins," he said. "They're just experiments with a new and unproven product." Feibus predicted that it will be a while before Transmeta secures actual design wins with heavyweights such as Compaq or IBM. "No one's going to run with this... until the second half of next year at the earliest," he said. Compaq sources said the Crusoe chips the company was working with -- likely the TM5400 or TM5600 -- did not show clear price and performance advantages over the forthcoming low-power Pentium III. Some of the benchmarks also did not show good results, sources said. It's unclear if other divisions of Compaq will utilise Crusoe, but they could well do so, as Compaq's Hockey suggests. Tuesday's news reports, for example, said that Compaq Asia might still use the chip in a notebook. The news about Compaq exemplifies the conundrum that Transmeta faces. Due to the way the Crusoe chip works, by converting X86 instructions into its own Very Long Instruction Word (VLIW) language and then optimising those instructions, it does not always show the best benchmark performance. However, Transmeta claims that its chips have good real-world performance, especially on repetitive tasks, which need only be translated once. Because Crusoe is such a new technology, announced last January, the damage is small. Most, if not all large PC makers, such as Compaq, will take a long, hard look at Crusoe before basing any products on it, analysts said. Transmeta also faces an uphill battle against Intel on pricing. Sources said that Compaq might have used the threat of a deal with Transmeta as a wedge to force Intel to offer lower prices on its mobile chips. Analysts also believe Transmeta is facing another battle now that Intel has taken up the low-power processor cause. Intel, as reported by ZDNet News, advanced the launch dates of these chips to counter the threat from Transmeta. "Given Intel's increased emphasis on low power, IBM abandoned its Crusoe plans in favor of an Intel chip. Transmeta has also been designed out at Compaq and Toshiba," wrote analyst Ashok Kumar of Piper Jaffray in a report published Tuesday. "The only Tier 1 OEMs who continue to show interest are its strategic investors -- Sony, Hitachi, and Fujitsu. Consequently Transmeta has had to pay for a reference design at Quanta, so that Tier 2/3 OEMs can private label the product. "So, Transmeta's grip on this market is precarious. Now that Intel has stopped ignoring the needs of the growing mobile market, Transmeta will find it more difficult to sustain an advantage." News of IBM's decision to abandon, for now, the Crusoe chip came out last week. Sources at the company cited lower-than-expected battery life as its reason for not using the chip, which it had been testing for use in the ThinkPad 240 mini-notebook. That notebook is now known as the ThinkPad X-series. The news comes at a particularly bad time for Transmeta, whose initial public stock offering began Tuesday morning. However, Transmeta still has several design wins with notebook PC makers, including Sony, NEC, and Hitachi. All three vendors are shipping in Japan. Sony is also selling its Vaio PictureBook, based on a 600MHz Crusoe TM5600 chip, in North America. See Chips Central for daily hardware news, including interactive roadmaps for AMD, Intel and Transmeta. Take me to ZDNet Enterprise To have your say online click on the TalkBack button and go to the ZDNet News forum. Let the editors know what you think in the Mailroom. And read what others have said.