Another One Bites the Dust

Nathan Edwards

Will they never learn? Another start-up hoping to compete with mighty Intel has crashed, sending some 200 engineers to the unemployment line and squandering about $74 million from disgruntled investors. Montalvo Systems, originally named MemoryLogix, is now just another smoking crater in Silicon Valley.

Montalvo was developing an x86-compatible microprocessor to compete with Intel’s low-power notebook processors. But Montalvo’s multicore design never reached market. The initial simulations didn’t meet expectations, and the engineers labored overtime to fix the problems. Meanwhile, the company’s cash kept dwindling. Last-ditch attempts to raise more funding failed. Eventually, the owners had little choice but to fold.

Sun Microsystems has purchased Montalvo’s assets for the relative pittance of a few million dollars. Those assets are almost entirely patents—some issued, most pending. It appears that Sun has little interest in hiring Montalvo’s engineers or in continuing their project. More than six years of Montalvo’s development work will most likely be abandoned.

I’m not happy to say I’m not surprised. Competing with Intel in the x86 arena is almost suicidal. Even a big company like AMD can barely hang on, and VIA Technologies is struggling, too. Start-ups have become a long shot.

Remember how Transmeta got steamrollered? Although Transmeta’s x86-compatible Crusoe and Efficeon processors were innovative, they failed to capture much market share from Intel. Transmeta survives, but only because of a cash settlement from Intel in a patent dispute. Crusoe and Efficeon are gone. Transmeta’s sole cash business is licensing some power-saving technology the company developed.

I think the sorry fates of Transmeta and Montalvo will discourage any future start-ups from designing x86 processors to compete directly with Intel. Not everyone agrees. My former colleague at Microprocessor Report, Peter Glaskowsky, thinks new competition is still feasible. (Peter was a key person at Montalvo. One of the company’s founders was Peter Song, another former MPR analyst.) However, my conclusion is that investors will no longer risk the big money needed to challenge Intel on its home turf. AMD may win a match now and then, but in the long run, Intel rules the x86.

Tom Halfhill was formerly a senior editor for Byte magazine and is now an analyst for Microprocessor Report .

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