Artisoft, Inc. Product Strategy overview August 1993 The intent of this document is to provide Artisoft¨ customers, resellers, employees, shareholders and others who have a stake in the company, with an overview of ArtisoftÕs product strategy. Mission Statement Artisoft, Inc. is dedicated to bringing innovative, easy-to-use, cost-effective network communication solutions to individuals, workgroups, large corporations and other growing organizations. Summary Artisoft intends to broaden its networking technology in the near future by developing products that fill a broader range of usersÕ needs, from basic file and printer sharing to high-end services such as multiplatform connectivity, distributed networking and high-performance server software. This will occur primarily through segmentation and additions to our network operating system product line. The company will also place greater emphasis on increasing core network services through additional enhancements in network management, diagnostics and utilities. Artisoft plans to offer network hardware and software solutions to meet business productivity needs, while presenting to the reseller and end user a value that is superior to competing products. Network solutions will include a scalable set of network systems products, utilities, enhancements and hardware products. Product features and benefits will be developed to serve traditional Artisoft markets and to attack significant new segments. Targeted markets include entry-level systems, small-to-medium size businesses, workgroups and large corporations. The company plans to continue aggressively developing the technologies vital to its ongoing success, but now is also pursuing OEM arrangements and alliances to obtain additional technologies to fulfill its mission and shorten the time to market. These may include the technologies for utilities, hardware, groupware and other potential products, either as standalone products or as core functions integrated into the LANtastic¨ networking product line. We will pursue opportunities, including hardware as a part of the networking system, when they are integral to the total solution required by the reseller and end user, and where such products can assist in building the companyÕs overall market share. SALES CHANNEL One of the companyÕs key strengths is its extensive and experienced sales channel. Artisoft products are available through all primary sources. These include international, national and regional distributors, mass merchants, mail order firms, superstores, traditional resellers, VARs, system integrators and consultants. Many Artisoft resellers specialize in providing networking solutions. They receive advanced training and have passed stringent tests of their knowledge. They represent valuable differentiation for the company as they provide the expertise end users need to gain the most return from their networking investments. Market Share Considerations - Total License Shipments In 1991 Artisoft moved to a solid number two position in worldwide LAN operating system shipments. The company increased its market share further in 1992. Market Share Considerations - PC Compatible Peer-to-Peer In the same time frame, ArtisoftÕs LANtastic Network Operating System was number one in the peer-to-peer worldwide market. LANtastic continues to retain a large market share despite increased competition in the peer-to-peer market place. The LANtastic Network Operating System, a pioneer in the peer-to-peer segment, now faces competition from approximately twenty companies. However, LANtastic is a mature, feature-rich product that simply provides a superior means of networking for a wide variety of users. The continued enhancement of LANtastic should increase its appeal for a growing number of network installations. ARTISOFT PRODUCT STRATEGIES FOR VARIOUS LAN MARKETS Since its entry into the networking market, Artisoft has concentrated its efforts in the small-to- medium size business marketplace. Early research showed that this market encompassed the largest number of potential customers with a great need for improved productivity. Artisoft remains committed to the market segments that represent the greatest opportunity for sales. A recent survey in Computer Reseller News indicates that the 1-34 user network size will continue to be more than 70% of the market through 1996. However, product refinements and the companyÕs experience now make it feasible to reach out to additional market segments represented by the larger installations. Compilation of existing customer registration information and extensive on-going end user proprietary research have established that most LAN customers want file and printer sharing, ease of use, and reliability from their local area networks. This applies to entry-level customers, small-to-medium size businesses, corporate workgroups and large businesses. However, each of these groups also has its own special needs. While LANtastic v5.0 is a scalable solution in itself, designed to fit the majority of needs of all market segments, future products will be developed to specifically fit the needs of each segment on a more custom-tailored basis. ENTRY-LEVEL systems DESCRIPTION Home use Small business Artisoft Opportunity Entry-level version Artisoft perceives opportunity in providing an entry-level version of its network operating system. This version would maintain the reliability and ease of use, installation and maintenance that have created ArtisoftÕs competitive advantage in the peer-to-peer arena, but would carry scaled down administration, security and multiplatform connectivity. An entry-level network would easily fit into ArtisoftÕs product line and could be scalable, i.e. able to be integrated into a more advanced version as the needs of the customerÕs business change with growth. SMALL-TO-MEDIUM SIZE BUSINESSES DESCRIPTION Businesses too small to employ a full-time network administrator ARTISOFT SOLUTION LANtastic Network Operating System v5.0 and beyond The current version of the LANtastic Network Operating System is an award-winning, sophisticated, full-featured business networking solution. It compares favorably with other vendorsÕ dedicated-server systems. LANtastic v5.0 can easily accommodate networks from two up to hundreds of computers. LANtastic distinguishes itself from competing peer-to-peer products by its better performance, administration, multiplatform connectivity and security; yet the system is low cost and easy to use. In addition, a new version with increased emphasis on multi-protocol connectivity and other high-end features is currently in development. Distributed networking LANtastic networks function as either peer-to-peer networks, where resources are shared flexibly; or as client-server networks, where resources are tightly controlled; or in a configuration between the two Ñ whichever best meets the distributed networking needs of users. This means that users can manage multiple computers to distribute resources, distribute data and distribute processing in any combination they desire. Administration There has been an increase in the average number of nodes in LANtastic networks. As network size increases, so does the need for network administration. This was addressed in LANtastic v5.0 by enabling administrators to set up all user accounts from one server, manage those accounts from one PC and even monitor or control any PC on the network. Administration also includes managing resources such as printers. Administering a LANtastic network will remain easy and flexible. Multiplatform Connectivity LANtastic v5.0 includes basic built-in multiplatform connectivity to environments such as NetWare¨, UNIX¨ and OS/2¨. Multiplatform support is ideal for both large heterogeneous networks and departmental networks. ArtisoftÕs optional connectivity series also offers LANtastic users additional connectivity to Macintosh¨ and TCP/IP networks. In future versions, Artisoft will offer increased multiplatform connectivity through both its networking system and add-on packages. Advanced peer-to-peer features broaden LANtasticÕs appeal to new market segments, while core features of LANtastic continue to provide better networking for small and medium-size businesses and for workgroups. Security LANtastic security is superior to that of all competitive peer-to-peer products. Some businesses need only limited security, while others demand extremely tight protection for their data. The LANtastic system, which already offered tight security, now includes even file-level protection in v5.0, with up to 14 levels of discretion available. WORKGROUPS AND LARGE CORPORATIONS Corporate America is an emerging market for peer-to-peer LANs and distributed networking in general, and Artisoft plans to provide a strong solution for this environment. In many areas, departmental workgroup computing is similar to computing in small and medium-size businesses, but a workgroup shares information both with its own members and with a corporate network. This gives higher priority to remote connectivity and multiplatform support. LARGE CORPORATIONS Larger networks Corporate workgroups Artisoft Opportunity Dedicated-server version of LANtastic A dedicated server version of LANtastic is under development. It would offer increased performance in I/O intensive, multi-user, database applications. Although LANtastic currently can place the server in a dedicated mode in a DOS-based operating system, even higher performance can result from providing a version of LANtastic based upon a 32-bit, multi-tasking operating system. Such a version could also provide the corporate user with built-in connectivity to such network operating systems as NetWare, Banyan¨ Vinesª, IBM LAN Server¨, and Microsoft¨ NT, LAN Manager and Windowsª for Workgroups, as well as an upgrade path from other LANtastic products. OTHER ARTISOFT PRODUCTS AND THEIR PLACE IN PRODUCT STRATEGY HARDWARE PRODUCTS Networking hardware products from Artisoft are important to the total solution approach to meeting customersÕ needs. End users and resellers in the small-to-medium size business markets find having a total solution Òin a boxÓ both convenient and successful. Artisoft resellers and users can turn to one source for all their software and hardware networking requirements. Opportunity Artisoft hardware technology can be aggressively marketed within various networking segments. It also can be used to enhance acceptance of Artisoft software products. The internal development of Application Specific Integrated Circuits (ASIC) technology makes the company a highly competitive player in the network adapter market. Artisoft clearly recognizes the competition, eroding prices and lack of differentiation in this market; however, because the company already possesses sophisticated and appropriate technology, significant additional development expenses will not be incurred to participate more aggressively in this market. Future hardware products that fit into a total networking solution could be provided internally, as a joint venture with another industry leader, or through an OEM partner agreement. Network enhancements and utilities As the user base and size of LANtastic networks expand, add-on products can provide a number of solutions for these customers. Artisoft add-on products could result from internal development or from strategic OEM partnering, joint development or the acquisition of technology. Artisoft can build these enhancements into the network operating system or present them as standalone products. The total networking solution provided to resellers, VARs and end users has proven to be an integral ingredient of ArtisoftÕs overall success. Artisoft intends to consider incremental revenue opportunities in the following areas: ¥ Interconnectivity, bridge and router technology; subsets include wide area networks (WANs) and multi-protocol support ¥ Network management/diagnostics ¥ Network backup ¥ Fault tolerance GROUPWARE Groupware is a term for software that enhances the ability of business people (typically teams) to collaborate on projects via networked computers. Groupware includes electronic mail, conferencing, scheduling, modem and fax services. According to Fortune (March 23, 1992), using groupware can cut the time spent on team projects by an average of 90%. Artisoft recognizes the emergence of groupware and its availability in some network operating systems, and the company is evaluating use of elements of its network conferencing technology and dictation system as potential groupware applications. Groupware also represents an excellent area in which to join with other industry leaders to offer users additional services at lower cost than similar competitive products. Selling these applications, which are optimized in networking environments, as standalone products could produce incremental revenue; bundling them with LANtastic could increase the companyÕs differentiation and competitive advantage. The future will bring greater emphasis on integrating the network with other communication devices such as telephones. As an innovator of sound and network technologies, Artisoft expects to continue efforts on such integration. ©1993 Artisoft, Inc. All rights reserved. Artisoft and LANtastic are registered trademarks of Artisoft, Inc. Other company names, brand names and product names are the trademarks and/or the property of their respective companies. This statement is one of present direction and does not guarantee that each product, technology or strategy will ultimately be developed or implemented. The features described above are developmental and subject to change without notice.