This is a field where you must not only have a good product, you must also have a solid market AND a solid marketing team, AND you must avoid bad PR like the plague, AND any major players (like Intel) must not deliberately sabotage efforts to compete, AND your plant can't be struck by major earthquakes.
(Why are all the major chip makers in Taiwan, Japan and America ALL concentrated in areas with high tectonic activity? Is there something in the fault line they use in the production line?)
The bottom line is simple. A chip fabrication plant can cost tens of millions to hundreds of millions of dollars, skilled chip designers can command hefty salaries, many of the key markets are 0wn3d by monopolies of questionable legality who flirt with unethical practices to keep their position, and software developers reinforce this by targetting established, high-volume platforms and that means no new products get support.
Of course, Transmeta didn't help its case. Its Linux distro was late, the first batch of chips was buggy, they didn't sell to anyone outside of the "big players" (and "big players" only really buy from other "big players", because volume bought and sold = profit), and they only produced an 80x86 layer for the Crusoe, rather than using the capabilities to cross market boundaries and therefore create volume by getting into many niche markets.
Also, their design was poor. Intel beat them on power consumption in a very short space of time, and this is Intel we are talking about. At the same time, people knew there were problems with 80x86 scalability (hence the work on SMP and hyperthreading), but Transmeta didn't look far enough ahead to build a multicore product, when they were already building a design from scratch and had ample opportunity to make such changes.
(In comparison, AMD and Intel have to engineer such features into an existing design, which is always much harder and likely to be much slower than working from first principles. AMD's and Intel's route also offers much better odds of bugs being found in the design, at a later date, as their architecture was never intended to be multicore.)
So, I don't hold Transmeta blameless in this. They may have been pushed over the edge, but they still chose to walk along the cliff in the first place, knowing it to be a dangerous spot, and knowing that the view wasn't even that good there, to make it worth the risk.
One of these days, I hope to see a company start up that takes the time to be truly innovative (and not just fake it), takes the time to get things right, and makes a product so damn unbeatable it wipes the floor with everything else.
It does happen. True, AMD is no start-up, but they were hardly giants in the 80x86 world. With the Opteron and their 64/32-bit crossover architecture, they've demolished Intel's Itanium and even convinced Microsoft to switch to them for 64-bit stuff. Given the longevity of the Wintel duopoly, that took a good plan and a good effort.
Any start-up could do just as well, or better, because it wouldn't have the legacy hardware to build around. They could do a clean design that merely supported legacy code. Transmeta started down that road, but for some reason chose only to camp a little way down it and go no further.
The "ideal" processor would work just as well as a CPU, GPU, network processor or processor for a disk array, as then a manufacturer can go to a single vendor, buy in even bigger bulk, and save money on all aspects. Your computer would become a Beowulf cluster, in effect, with specialization in software. It would be cheaper to build, and would mean that the same system would work for a desktop or a server. You'd simply load in different specializing software, to shift the processing power to where it was needed. And because of that, you'd get better scaling on production costs, as you'd only need one "base product" and inventory could be reconfigured on the fly to whatever was in demand.
It doesn't happen, because those with money lack imagination, those with imagination lack money, and those with the necessary design skill to actually carry it out have neither money nor imagination. That is why "celebrated inventors" are astonishingly rare, but the products they come up with are invariably "obvious" in hindsight.