Finally, I can call myself an inventor.
I've been inventing things for almost 20 years now, but Montalvo Systems was the first company I worked for that took intellectual property seriously. (That was no coincidence; it was also the first company I worked for where I helped develop the intellectual-property strategy.)
During my years at Montalvo, I came up with quite a few ideas and participated in brainstorming sessions that yielded more ideas. Most of these sessions were limited to Montalvo's own people, but there was one person I brought in to help us as a consultant--Don Alpert, who was the principal architect of Intel's Pentium processor and, possibly less significantly, a member of the editorial board at Microprocessor Report.
Working with three of us from Montalvo--myself and chief architects Greg Favor and Peter Song--Don took the lead in preparing a set of related patent applications describing a new way to design microprocessors.
The first patent from this set was ... Read More
Sun Microsystems has confirmed it bought Montalvo Systems, but probably for a lot less than venture capitalists plunked into the company.
"Montalvo's assets will be integrated into Sun's Microelectronics business unit. We believe acquiring these assets will enhance the current and future products we are developing and expect them to contribute to future generations of Sun's microprocessor technology which will in turn drive additional differentiation for Sun's Systems products, a company representative wrote in an e-mail.
"We are not disclosing the terms of the deal as it is not material with respect to earnings per share," the representative continued.
Sun sealed the deal on April 21, but the company did not put out a press release then, according to its Web site. Earlier today, news sites were reporting that the deal was close to being signed. Sun later coughed up the confirmation.
Montalvo designed, but never quite produced, an energy-efficient multicore chip that runs the same software as processors from Intel and Advanced Micro Devices. Venture capitalists put more than $73 million into the company. Montalvo, however, burned through that and has been looking for more money. Subsequent investors balked. Negotiations between Sun and Montalvo were reported on News.com earlier this month.
The Register has reported that Sun bought Montalvo for close to $5 million. Montalvo has had trouble producing chips, but it has some interesting patents.
Sun is likely interested in the patents and the engineering team. Montalvo employs noted chip designers like Greg Favor. It is less likely that Sun will produce a chip that competes with Intel and AMD. Sun uses Intel and AMD processors in its servers and doesn't own its own chip factories, like the other companies. Owning your own factory is often a strategic advantage in the chip world. Companies that have tried to break into this market without their own factories have mostly failed.
Talk about a week for crazy chip acquisitions. Apple bought PA Semi, which makes an energy-efficient chip for servers, earlier this week. While Sun continues to make and design its own chips, Apple does very little of that work. So it might be that Apple is trying to build up a patent portfolio.
Sun is putting the finishing touches on its purchase of stealthy chip start-up Montalvo Systems.
As first reported by CNET News.com, Sun started conducting serious negotiations with Montalvo at the beginning of the month. The formal announcement is expected soon.
Montalvo has designed a low-power, multiple core chip for portable computers. The chip can run the same software as processors from Intel and Advanced Micro Devices, but consume less power. The trick is that the cores on the chip are asymmetrical: some are high-powered for complex problems while others that handle basic tasks consume little power.
The market for Intel-compatible chips is immense, but breaking into it isn't easy. Intel has a huge manufacturing division and a top-flight design team. Many companies have tried and most have failed. Montalvo has had problems even getting samples of its chips to work. (Fujitsu makes the chips for Montalvo.) Even AMD, no slouch in those departments, chronically goes through periods of unprofitability.
The company has also burned through an incredible amount of money. It has raised more than $73 million in VC funds but has been making the rounds looking for more. VCs contacted by News.com earlier this year said they passed: the company was burning way too much cash and success looked daunting.
Still, the company has an interesting patent portfolio, some have said. Sun is likely buying the company for the intellectual property and the engineering talent.
Sun Microsystems is negotiating to buy Montalvo Systems, the super-secretive chip start-up that has concocted a chip for portables, according to sources.
The deal follows a major round of layoffs at Montalvo. We heard the rumor of the layoffs yesterday and subsequently heard the cuts started. The company, which had earlier raised $73 million, has been seeking around $100 million from additional investors. Investors, though, have shied away.
Neither Sun nor Montalvo has confirmed the negotiations or the state of the transaction. Any deal may fade away before anything gets signed. But this is what we know at the moment from well-placed sources.
The company has designed a chip that can run the same software as processors from Intel and Advanced Micro Devices. What makes the chip different is that the four-core chip from Montalvo is asymmetrical. Two of the cores are high-powered cores for running intense applications while two are more energy efficient. Montalvo has submitted several patents on its ideas and some of the applications have recently become public.
Still, competing with Intel is no walk in the park. Many companies have tried and most have failed miserably. The prospect of taking on Intel, particularly at a time when Intel has just released a low-powered chip, is one of the main reasons investors have stayed away. Although Montalvo has designed a chip and has lined up Fujitsu to produce it, it does not yet have a piece of silicon in hand.
It is not clear how Sun will use Montalvo's technology. Sun buys chips from both Intel and AMD and would not likely be interested in making Montalvo's chips and taking on Intel and/or AMD, particularly since Sun doesn't even own its own chip factories. However, Sun does produce UltraSparc chips and tries to use these chips to enhance its high-end servers. The concepts from Montalvo's chips, conceivably, could be transferred to Sun's. More importantly, Sun would get Montalvo's engineering team.
Montalvo Systems, the super secretive company that wants to compete against Intel in chips for portable computers, has a big internal announcement coming tomorrow, according to sources, and the news may not be good.
The company may internally order layoffs and cutbacks, according to a source close to the company. Montalvo, which has raised more than $73 million, has been seeking an additional $100 million and burning through bridge loans. New investors haven't materialized, which could lead to cutbacks.
"They have to. They are way too big," said one VC, who had been approached by Montalvo for funding recently. Sources say the company employs more than 200.
The news may not be all bad. The company has also been trying to get its hands on samples of a chip based around its architecture. Montalvo has designed a chip, but as of a few weeks ago, it didn't have one. Fujitsu has agreed to manufacture the chip on behalf of Montalvo. Thus, this might be the announcement. The cutbacks, though, seem more likely.
Staffed by alumni from would-be Intel competitors like Transmeta and NexGen, Montalvo has designed a chip that can run the same software as processors from Intel and AMD. The trick is that the chip, which contains four cores, is asymmetrical. Two of the cores are high-powered, geared for running complex applications, and two run on less energy. The idea is that this can prolong battery life in smartphones or thin notebooks.
While the architecture is intriguing, competing against Intel is no easy task. Several companies have tried and most have failed, badly. AMD has done the best and it has lost more money than it has made in its 30-plus year life.
Like with other stories, Montalvo declined to comment on this story.
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