IBM and Network Appliance Relationship Delivers New Product Offerings for Small and Medium Sized Businesses

Armonk, NY - August 2, 2005 - IBM today announced an array of new storage offerings that further broadens its portfolio of solutions expressly designed for the fast-growing small and medium sized business (SMB) market.

The first is an entry-level storage disk offering, the first product resulting from the recent IBM alliance with Network Appliance (NASDAQ:NTAP), followed by a roadmap to introduce an expanded product line in the fourth quarter of 2005.

The first product resulting from the alliance, the IBM TotalStorage N3700, is designed to offer an economical and robust network attached storage (NAS) solution for small and medium-size businesses of less than 1,000 employees, yet is versatile enough to be used in large, distributed enterprises with remote office and branch office storage requirements. The device also incorporates iSCSI technology, a segment that is tracking the growth of SMB storage and is predicted to increase at a compound annual growth rate of 107% through 2009, according to analyst firm IDC1.

"The SMB customer segment requires simple, easy to deploy solutions for the data needs of a round-the-clock business environment," said Barry Rudolph, Vice President Disk Systems, IBM. "Today's announcement is anticipated to be just the first in a line of open solutions from IBM and NetApp that offer innovative solutions for companies relying on critical information in an on demand world."

"With the introduction of today's initial offering, Network Appliance and IBM are demonstrating the speed at which we plan to deliver tangible customer solutions from our agreement," said Patrick Rogers, vice president of Products and Partners at Network Appliance. "We are excited IBM is rapidly providing NetApp technology to SMB customers and we look forward to supporting IBM as they bring the benefits of our technology to additional customers in the near future."

The IBM TotalStorage N3700 is a robust NAS solution scaling up to 16 terabytes designed to deliver the ease and functionality of Internet Protocol attached storage along with the pervasiveness of iSCSI SAN technology. It offers features and functions SMB customers value, including support for disaster recovery, which allows users to mirror data both within the appliance as well as to a remote device.

Last week, NetApp and IBM announced that the companies planned to work closer together in the virtualization and blade server product segments. The focus is on combining IBM's storage virtualization technologies and the full line of NetApp® V-Series and FAS storage systems into integrated solutions, signaling the beginning of efforts to collaborate to exploit the synergies between the companies' respective virtualization technologies.

NetApp will also join IBM as one of nine founding members in the new Blade.org industry community. The community was conceived to enhance the relationships between the founding members and to serve as a catalyst for the industry to create new blade technology. NetApp is already providing back-end storage systems for IBM eServer® BladeCenter™.

Storage Archive for Data Retention
For companies facing compliance challenges, IBM is also announcing the availability of the TotalStorage DR550 Express, a single logical storage archive system providing non-erasable and non rewriteable policy-based storage management. The new offering is designed to be easy to install, configure and operate, to help address the needs of small and medium businesses facing growing data retention requirements, including requirements driven by emerging government and industry regulations. The device, which scales from one to 56 terabytes, offers encryption technology which can help protect data in the event of theft as well data replication technology to protect information in the event of a disruption.

SAN Starter Kit
Rounding out today's offerings for the SMB market, IBM is introducing the SAN Starter Kit to help small business customers consolidate their storage into a single place, in a manner that is accessible and sharable by servers throughout the business. The SAN Starter Kit is designed for xSeries environments and includes an IBM TotalStorage Storage Switch L10 and dual-controller IBM TotalStorage DS400 Express disk storage for an entry-level Fibre Channel solution for workgroup storage applications such as email servers, collaborative databases, and web serving. It will also include a detailed step-by-step Install Guide to help customers install their storage networking solution quickly and easily.

The IBM TotalStorage N3700 will be generally available in late August with prices starting at $50,000. The DR550 is available today with prices starting around $45,000. The SAN Starter Kit is also available today and is priced at $16,376. All products are available with worldwide service and support, including lending options through IBM Global Financing, from IBM and IBM business partners.

About IBM
IBM is the world's largest information technology company, with 80 years of leadership in helping businesses innovate. Drawing on resources from across IBM and IBM Business Partners, IBM offers a wide range of services, solutions and technologies that enable customers, large and small, to take full advantage of the new era of e-business. For more information about IBM, visit http://www.ibm.com.

1 According to IDC's Worldwide Disk Storage Systems 2005-2009 Forecast and Analysis: Virtualization, Regulatory Compliance, and Cost-Optimized Storage - Pillars for Future Growth, IDC #33477, June 2005

"Safe Harbor" Statement under U.S. Private Securities Litigation Reform Act of 1995
Statements in this press release may include forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements include any statement regarding future events or the future financial performance of Network Appliance, Inc. that involves risks or uncertainties. In evaluating these statements, readers should specifically consider various factors that could cause actual events or results to differ materially from those indicated, including without limitation: continuing decline in the general economic conditions, customer demand for products and services, customer acceptance of product architectures, increased competition, and other important factors as described in Network Appliance, Inc. reports and documents filed from time to time with the Securities and Exchange Commission, including its mostly recently submitted 10-K and 10-Q.

Press Contact:
Lisa Lanspery
IBM
(646) 598-6171
lisalans@us.ibm.com