With their almost total ownership of the market, the IT community would be forgiven for thinking that Intel and AMD are the only two companies developing and shipping server processors. The two companies split almost 99 percent of the x86 PC server market: Intel with the lion's share of 92 percent and AMD at 6.9 percent, according to IDC.

And when it comes to the total microprocessor market, Intel takes 82.7 percent of the market, while AMD owns about 15.5 percent, Mercury Research estimated in a Q2 2004 report.

There are smaller chip designers, though, that are carving out a place for themselves by creating processors that meet very specific needs. These companies started out building chips for other markets, and now are looking at the server market as a natural segue from their initial efforts. They face an uphill battle: Combined, Transmeta Corp., and VIA Technologies, for example, have yet to claim a single point of market share.

"Transmeta, with its specialty in low power x86 compatible parts, is going to play in blades"they have a small percentage of revenue from blades," said Shane Rau, program manager for PC semiconductors at Mountain View, Calif.-based research firm IDC. "VIA has a concentration on low-end microprocessor for emerging markets."

Transmeta and VIA claim there's plenty of opportunity for them. "The microprocessor market is huge," said Greg Rose, director of marketing at Transmeta, Santa Clara, Calif. "Transmeta's feeling is that companies can easily excel and there's enough room for all of us. We've defined our value proposition and our key differentiation in performance per watt per dollar. We feel we are a valuable alternative to competitive offerings."

Initially, Transmeta focused its efforts on the notebook market, as well as other small form-factor devices that demand long battery life, high performance and competitive pricing. In addition, the company has leveraged its expertise to enter the blade market.

"We've been big in this from the very beginning, because our low-power operation is perfect for blades," said Rose. "If you don't generate the heat in the first place, then you don't have to figure out how to move it or cool it or manage it."

Recently, the company's processors have gained traction with a couple of vendors. In August, Orion Multisystems said it would use Transmeta's Efficeon processors in its Orion Cluster Workstation, a new type of supercomputer that uses cluster technology. Hewlett-Packard is using the same family of chips in its HP Blade PC bc1000 as part of the HP Consolidated Client Infrastructure (CCI) architecture. In addition, Japan-based JM-net is installing Efficeon chips in its EC86S, a high-performance, power-efficient blade server for data center and grid computing environments that JM-Net plans to sell in Japan and Asia.

Transmeta continues to evolve its product line with the September release of a second generation of its TM8800 Efficeon processors, which have been migrated to a 90-nanometor CMOS semiconductor technology. The move gives the chips substantially higher performance, and improves performance per watt, according to Transmeta.

"We are getting some nice speed bumps as geometries get smaller," said Rose. "We upped the clock frequency from 1.1GHz to 1.6GHz and we have publicly stated that our goal is to be able to have 2-GHz processors by the end of the year."

The low power x86-microprocessor also incorporates AntiVirusNX technology to provide hardware support for the anti-virus protection enabled by Microsoft Windows XP Service Pack 2 (SP2).

Currently, VIA Technology hasn't gained traction in the blade or server marketplaces, according Rau. The company, however, has said it plans to introduce a chipset next quarter that will target both these technologies.