Bay Networks Announces Strategy for Building Networks that Optimize Business-Critical Applications.

LAS VEGAS--(BUSINESS WIRE)--May 4, 1998--

Removes Economic Barrier to Extending Application Intelligence to

Wiring Closets 

Extending its Adaptive Networking strategy announced one year ago, Bay Networks,(R) Inc. (NYSE:BAY) today announced a strategy for economically building switched network infrastructures that ensure the predictability and reliability of business-critical information flows.

The centerpiece of the strategy is the cost-effective distribution of application intelligence throughout the network to optimize application performance despite network congestion and disruptions.

Fundamental to this strategy is the announcement of new products, including the Accelar(TM) 1050 routing switch (see today's related announcement), which extends application intelligence to the installed base of Layer 2 edge switches. Bay Networks is also announcing Multi Protocol Over ATM (MPOA) software for the Centillion(TM) LAN-ATM family, and new Ethernet and Token-Ring switching modules for its modular enterprise platforms. Over the next several months, Bay Networks will announce its application-optimized policy and network management strategies.

"Customers don't want to worry about whether or not their network will support business-critical applications, so we are focused on creating networks that adapt to the needs of applications. To do that, networks need to become more intelligent, but that intelligence cannot carry a penalty in terms of cost, complexity, or performance," said Lloyd Carney, executive vice president and general manager of Bay Networks Enterprise Business Group. "Our strategy is to eliminate economics as a consideration when our customers are deciding how to build their networks for the future."

"This announcement highlights a fundamental shift in strategy for Bay toward a more focused, solution-oriented approach. This is a very important -- and necessary -- step for the company," said Eddie Hold, research analyst, network infrastructure, for market research firm Current Analysis. "As the value of information has increased, the sales process has migrated away from simply selling to the technical staff, and instead involves the senior management at a prospective customer. The senior management does not particularly care what each box does as much as how the resulting network solution will improve the distribution of information."

Extending Intelligence to the Edge

Key to its strategy of enabling application-intelligent infrastructures, Bay Networks is introducing the concept of extending application intelligence to the network edge. Application intelligence is the ability to monitor applications and grant certain information flows higher priority over generic data applications. For instance, customers may want to prioritize critical applications such as SAP or those that integrate voice, video and data over file and print services or web surfing. Accomplishing this requires that network managers have the ability to set and assign policies that specify which users or applications have priority access or authorization. Determining rights and privileges is achieved through deep packet filtering, or peering farther into the data packet than is possible with current Layer 2 switches.

Deep packet filtering at Layer 2, Layer 3 and Layer 4 is required to implement policy services such as QoS, CoS and security. Today, these capabilities are mostly limited to corporate backbones due to the cost of Layer 3 devices. By making increased filtering intelligence more economical, QoS and security policies can be applied nearest the source, giving customers more consistent quality of service and security across their entire network.

The New Economics of Networking

To achieve the cost effectiveness required to make distributed application intelligence feasible, Bay Networks is delivering dramatic price/performance improvements. This fact is evidenced by the company's industry-leading products in the 10/100 autosensing switch, routing switch and ATM product lines. Leveraging this success, Bay Networks will strive to lead the trend toward edge-to-edge application intelligence by nearly eliminating the price differentials between Layer 2-only and Layer2/Layer 3 switching, and between Ethernet and ATM solutions.

For example, customers can now aggregate 10/100 switches, such as the BayStack 350 10/100 switch, with the Accelar 1050 routing switch, gaining Layer 3 intelligence and Gigabit uplinks, for a total system cost of less than $200 per port -- only $50/port additional over Layer 2-only devices.

A further proof point for the New Economics of Networking in ATM environments is the introduction of Layer 3 acceleration at minimal cost through the addition of MPOA services into existing Centillion hardware platforms. Both MPOA client and server capabilities are software additions to current Centillion LAN-ATM solutions and to Bay Networks' family of ATM Routing Engines.

New Products

As part of Bay Networks enterprise strategy, the company is introducing several new products and enhancements to existing Ethernet and ATM product lines. Details on these products, including price and availability, are available in the Bay Networks Networld + Interop press kit or by visiting Bay Networks newsroom at www.baynetworks.com/News. -0- -- Accelar 1050 routing switch -- High density 100 Mbps fiber modules for Accelar 1200 -- Long distance Gigabit modules for Accelar -- MPOA for Centillion systems -- 10/100 switch module for System 5000 enterprise platform -- 10/100 switch module for System 5000BH cell-enabled enterprise

platform -- 24-port Token-Ring switch module for System 5000 BH -- ATM Routing for the System 5000BH -0- About Bay Networks -- Where Information Flows(TM)

Bay Networks, Inc. (NYSE:BAY) is a leader in the worldwide networking market, providing a complete line of products that serve corporate enterprises, service providers and telecommunications carriers. The company offers frame and ATM switches, routers, shared media, remote and Internet access solutions, IP services and network management applications, all integrated by Bay Networks' Adaptive Networking strategy. With headquarters in Santa Clara, Calif., Bay Networks markets its products and services around the world, providing 7x24 support coverage. For additional information visit the company's World Wide Web site at http://www.baynetworks.com or call 800/8-BAYNET.

This release, other than historical financial information, contains forward-looking statements that involve risks and uncertainties. These statements may differ materially from actual future events or results. For instance, factors which could cause results to differ from future events include the timing of customer orders, the rate of adoption of new technologies in the data networking market, and competitive pricing actions, among others. Readers are referred to the documents filed by Bay Networks with the S.E.C., specifically the most recent reports on forms 10-K and 10-Q, which identify important risk factors which could cause actual results to differ from those contained in the forward-looking statements. -0-

Note to Editors: Bay Networks is a registered trademark and Bay Networks -- Where Information Flows, Accelar and BayStack are trademarks of Bay Networks, Inc. Other brand and product names are registered trademarks or trademarks of their respective holders.

CONTACT: Bay Networks

Ellen Roeckl, 408/495-3083

[e-mail]

or

FitzGerald Communications

Stacy Breines, 415/951-4738

[e-mail]