FalconStor IPStor VirtualTape Library Software Certified with Network Appliance™ Enterprise Storage

Melville, N.Y. - October 26, 2004 -- FalconStor Software, Inc. (Nasdaq: FALC), a leading developer of network storage infrastructure software solutions, today announced that its VirtualTape Library software has been certified with NetApp® NearStore nearline storage systems and the NetApp Data ONTAP™ operating system. Customers will now benefit from complete interoperability, optimization performance, and increased functionality of VirtualTape with the NetApp offerings.

NetApp NearStore is a disk-based storage system that combines the Data ONTAP operating system with cost-effective ATA disk drives for a variety of reliable and economical data needs including archival, backup/recovery, disaster recovery, and compliance to help ensure the integrity of data. The FalconStor software enables customers to use disks to consolidate the management of backup resources while enhancing the reliability of backup operations and accelerating the speed of recovery. This certification validates the plug-in compatibility between customers' existing backup software and NetApp storage systems through the virtual tape drive/library provisioned by FalconStor's solution via Fibre Channel, iSCSI or NDMP protocol. The details of the certification may be viewed at www.netapp.com/osn/info/vtl/falconstor-main.html.

"Together NetApp and FalconStor bring flexibility of choice with this easily integrated option for improving an enterprise backup environment," said Patrick Rogers, vice president, marketing at Network Appliance. "Through our FalconStor partnership, customers can select a transparent disk-based media alternative to existing tape solutions that increases recovery speeds while minimizing the impact to existing back-up infrastructure and procedures."

"We'll continue to work closely with NetApp to provide our customers with open, flexible, and powerful VirtualTape library solutions," said Bernie Wu, FalconStor vice president of business development. "In addition to the just completed certification, this will include cross-support of common customers and identification of best practices."

The FalconStor VTL solution leverages FalconStor's award winning IPStor® enterprise-level software, and will enable the award winning NetApp NearStore storage systems to act as the disks emulating a tape drive/library, allowing administrators to easily create and attach virtual tape drives and libraries. Backup servers see these virtual tape drives and libraries as physical tape drives and libraries.

For a full list of FalconStor VTL software certifications, visit http://www.falconstor.com/certificationvtl.asp.

About FalconStor
FalconStor Software, Inc. (NASDAQ: FALC) is a leading developer of network storage infrastructure software solutions designed to optimize the performance and availability of today's complex IT infrastructures. Deployed by a wide range of Fortune 1000 enterprises, FalconStor's flagship product, IPStor, optimizes storage utilization, accelerates backup and recovery, maximizes I/O performance and ensures business continuity via sophisticated data replication services. It is available and supported through major OEMs, system integrators and resellers worldwide.

Founded in 2000, FalconStor is headquartered in Melville, NY, with offices throughout Europe and the Asia Pacific regions including Paris, Tokyo and Taiwan. FalconStor is an active member of the Technical Support Alliance Network (TSANet), Storage Networking Industry Association (SNIA) and Fibre Channel Industry Association (FCIA). For more information visit www.falconstor.com or call 1-631-777-5188.

This press release includes forward-looking statements that involve risk and uncertainties that could cause actual results to differ materially from the forward-looking statements. These risks and uncertainties include: delays in product development; market acceptance of FalconStor's products and services; technological change in the storage and networking industries; competition in the storage networking software market; the potential failure of FalconStor's OEM partners to introduce or to market products incorporating FalconStor's products; intellectual property issues; and other risk factors discussed in FalconStor's reports on Forms 10-K, 10-Q and other reports filed with the Securities and Exchange Commission.

Press Contacts:
Herman Chin
FalconStor
631-962-1163
herman.chin@falconstor.com

Katryn McGaughey
Network Appliance, Inc.
408-822-3856

katrynm@netapp.com