December 28, 2000, 4:15 PM — GATEWAY AND AMERICA Online will use the Transmeta Crusoe processor and Mobile Linux operating system in the forthcoming IAs (Internet appliances) the two companies are developing.
In the surprise announcement this week, Gateway and AOL will use the Crusoe processors and Mobile Linux in at least two jointly branded, legacy-free appliances aimed at consumers who want easy access to the Internet, said John Spelich, Gateway's director of corporate communications.
The first appliance will hit the market in time for Christmas, with the second scheduled to follow in the first quarter of 2001, according to Spelich.
Bearing a sub-$500 price tag, the Linux-powered appliances will be marketed in a variety of ways by both Gateway and AOL. The units will be sold direct from Gateway online, via Gateway's Country Store, or via AOL's Web site. Free deployment of the Gateway/AOL appliances via Internet subscription deals with local telephone companies is also in the works, Spelich said.
Transmeta, which has no manufacturing facilities of its own, has yet to ship Crusoe processors in volume. However, officials at Hsinchu, a Taiwan-based contract manufacturer for Taiwan Semiconductor Manufacturing, said earlier this month that the company is ready to start volume production of the chips whenever Transmeta gives the word.
Intel announced in January that its Linux-based IA will arrive by the end of summer.
Dean McCarron, an analyst at Mercury Research, in Scottsdale, Ariz., said the success of recent moves into the consumer IA space will depend on lowering price points.
"As the price comes down, the volume goes up," McCarron said. "As they start pushing these systems, and [IA] prices drop below where the PC is, you are going to see larger unit volumes."
But McCarron warned that the traditional PC is already deeply embedded into the consumer marketplace.
The success of Internet appliances "will be fairly evident within two to three years, but given the PC has been around for 20 years, it may be 10 years before we see a $99 [appliance]," McCarron said.