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SDCC is free but sometimes hard to configure. It produces less efificient
code in most cases (compared to comercial compilers)
The chess proram from the last elektor contest needs arround 6k with
keil (OT9) and about 11k with SDCC
Raisonance is also very good. The light version (32k) is much cheaper
Why don't you use AVR RISC microcontroller. They are better than 8051 micro in speed.(single cycle execution). Software tools are also easily available from Imagecraft (www.imagecraft.com) for 30 days evaluation and freely downloadable.