Sonicblue -- the former graphics-chip company turned Internet-appliance maker -- announced on Monday that it began shipping ProGear, a wireless Internet tablet using Transmeta's Crusoe TM3200 chip. Sonicblue (formerly known as S3) was one of the first companies to announce plans to build a Transmeta-based device, shortly after the chipmaker emerged from stealth mode in January 2000. The company initially hoped to launch a consumer version of the Linux-based tablet, but is instead pitching the machine at hospitals and other niche markets. Cost is a big reason. The unit, which resembles an Etch-A-Sketch, will be priced in the neighbourhood of $1,500 (£1,000), depending on the configuration. Ward Williams, director of product marketing for Sonicblue subsidiary, Frontpath, said in an interview that he and his colleagues spent about a month trying to find a business model that would appeal to consumers, but to no avail. "We were trying to invent new math," he said of the effort. "These are going to be expensive, just by their nature." Williams said the company still hopes to bring the Web tablet to homes later in the year, but for now ProGear is aimed at business users. For example, the company has started supplying the units to hotels in New York and Chicago, which are renting them to guests. The versions now on sale feature either a 6GB hard drive or 64MB of flash memory, along with a 10.4-inch TFT screen, a three or six hour battery, 802.11B wireless networking, and USB and PCMCIA expansion ports. The Web tablet is one of a slew of new Transmeta-based products announced in recent weeks. Toshiba announced its Libretto mini-notebook in Japan on May 6. A similar model is expected to ship in North America in the third quarter of this year. NEC also recently brought its Transmeta-based LaVie notebook to North America as the new Versa Ultralight mini-notebook. The Toshiba and NEC notebooks -- based on the Crusoe TM 5600 chip -- are aimed at the corporate market. This gives Transmeta a foothold there against Intel. The company has also made a foray into the server market. Start-up, RLX, selected the Crusoe chip for its line of servers. Because of the chip's low power demand, the recently announced servers can be packed more closely together than traditional Intel-based servers, RLX said. The combination of the new notebooks and the server business will help Transmeta address the lucrative corporate market. However, Intel will not willingly cede ground. The chip giant has announced its own low-power Pentium III chips to match the Crusoe. As a result, analysts don't believe Transmeta-based products will overwhelm the corporate market -- at least not right away. "Intel has really been ratcheting up in response to AMD and Transmeta. So as a result its position is stronger than it was six or nine months ago," Mike Feibus, principal analyst at Mercury Research, said in a recent interview. The company shipped about 150,000 Crusoe chips in 2000, according to Mercury, which estimates Transmeta shipped about the same number in the first quarter of 2001 alone and predicts it will have shipped about 1 million units by the end of the year. Hoping to be more competitive, Transmeta will introduce a new TM 5800 chip later this year, which it says will reduce power consumption by about 20 percent and raise clock speeds to as high as 800MHz, as the result of a newer 0.13-micron manufacturing process. Migrating from one process to another, such as from 0.18 to 0.13, allows a chipmaker to increase clock speed and reduce power consumption by printing smaller circuits on the chip. Transmeta also plans to introduce a brand-new processor core in 2002 to help it become more competitive with Intel. The new 256-bit core will offer additional performance by processing data in larger chunks. See Chips Central for daily hardware news, including interactive roadmaps for AMD, Intel and Transmeta. Have your say instantly, and see what others have said. Click on the TalkBack button and go to the ZDNet News forum. Let the editors know what you think in the Mailroom. And read other letters.