AOL, Gateway Tap Transmeta Chip

Gateway Inc. and America Online Inc. Tuesday announced plans to use a processor from Silicon Valley newcomer Transmeta Corp. in a
Linux-based Internet appliance set to debut later this year.

The deal marks a milestone for both Transmeta and Linux as Gateway and America Online is breaking rank with leading chip
manufacturer Intel Corp. and software giant Microsoft Corp. to
develop the lineup of Internet devices.

The decision further affirms the Linux-based operating systems ability to
grow into mainstream Internet use. It also tags Transmeta’s chip design as
an inexpensive alternative for low-power microprocessors.

The Transmeta Crusoe smart processor was tapped power the new line of
network-ready IAs. Transmeta’s Crusoe processor is ideally suited to power
IAs and handheld devices because it offers extended battery life, can be
used in small devices, and offers lower operating temperatures than
traditional processors.

AOL and Gateway will also use Transmeta’s version of Mobile Linux as the
operating system for these products.

Peter Ashkin, Gateway senior vice president and chief technology officer,
said Crusoe and Mobile Linux would help support Gateway’s strategy of
offering consumers easy-to-use portable Internet access and AOL’s
family-friendly content.

“Crusoe is a great processor choice to help us to deliver the kind of new
Internet services that consumers will value in this new marketplace,”
Ashkin said. “Mobile Linux will enable our wireless IAs to deliver the
performance around the house that our customers will expect.”

David Ditzel, Transmeta chief executive officer, said AOL and Gateway have
the best overall strategy in the emerging Internet appliance space and the
firm thrilled to have a strategic relationship with both of them.

“At our launch in January, we promised Crusoe would usher in a new world of
mobility,” Ditzel said. “With their innovative approach to Internet
appliances for the home, Gateway and AOL are playing a significant role in
moving that vision forward.”

Gateway made a strategic investment in Transmeta in April and selected
Transmeta’s Crusoe processor for inclusion in the family of products its
launching with AOL.

At the same time, AOL and Gateway formed a pact to offer consumer Internet
appliances featuring “Instant AOL” wireless Web pad services. Powered by Netscape’s thin browser technology using
the Linux operating system, the titan tandem is unveiling a series of
specialized IAs for home and business use in a growing wireless world.

At the time the strategic alliance was formed, Bob Pittman, AOL president
and chief operating officer, said AOL’s research showed that its members
place high value on their ability to access Internet content on new
portable devices in addition to the home PC.

“These easy-to-use appliances are an excellent way of providing the whole
family convenient access to AOL’s many popular features, content offerings
and services from anywhere in the home,” Pittman said. “We are excited that
these appliances will enable consumers to do everything from checking news
headlines to ordering groceries or even updating the family calendar from
virtually anywhere with just a touch of a button.”

Pittman added that the specialized family of AOL-Gateway appliances
featuring its instance access services was a major step fulfilling its “AOL
Anywhere strategy.”

“As consumers continue to add devices to their PC experience and make the
Internet a more constant companion in their lives, the appliances will give
consumers an ‘insta

nt on’ portable version of AOL’s features,” Pittman
said. “It will truly help make their everyday lives easier and more
convenient.”

The companies are marketing the new devices through traditional sales and
distribution channels, which include the AOL service with more than 22
million members and Gateway’s nationwide retail locations nationwide.