Transmeta Jumps After Microsoft Picks It for Tablet PC

In its push to move beyond the traditional PC, Microsoft (MSFT Quote) Monday announced that it will partner with chipmaker Transmeta (TMTA Quote) to produce its Tablet PC notebook computer.

The Tablet PC will use Transmeta's low-power 600-megahertz Crusoe microprocessor. The company will also help Microsoft to tweak the Tablet PC's Windows XP operating system. Transmeta surged on the news, in part because Microsoft's decision to pick the upstart instead of traditional partner Intel (INTC Quote) came as something of a surprise. Transmeta was up $3.50, or 22%, to $19.50 a share.

For Microsoft, the Tablet is another effort to show that it's making good on its promise to focus on "next generation" software and devices. Microsoft Chairman Bill Gates unveiled the Tablet PC prototype at the Comdex trade show in November.

The lightweight, portable Tablet PC is a Windows operating system-based PC that acts like a large scratch pad. A user writes with an electronic pen, or stylus, and uses a few buttons, eliminating the need for a keyboard and a mouse.

Microsoft will provide the operating system, user interface and applications such as its electronic ink software. According to Microsoft, this program allows users to create, edit and annotate Word documents using a pen.

The snazzy features sound fun, but some industry watchers question their practicality. "Right now it looks like this product will only find use in niche communities for people who take a lot of notes, like students or utility workers," said analyst Alan Promisel at IDC, which provides market research.