FalconStor Software and Acer, Inc. Expand Existing OEM Partnership.

Business Editors

TAIPEI, Taiwan--(BUSINESS WIRE)--June 1, 2004

Acer Selects FalconStor iSCSI Storage Server Solution

to Address Storage Needs of Small to Mid-Sized Market

FalconStor Software, Inc. (Nasdaq: FALC), a leading developer of network storage infrastructure software, today announced that the company has expanded its existing worldwide OEM partnership with Acer, Inc. to include the comprehensive suite of advanced storage services currently available for FalconStor's flagship product, IPStor, as well as FalconStor's latest product innovation, the iSCSI Storage Server for Windows Storage Server 2003 (announced in May 2004).

Since mid-2002, Acer has been imbedding FalconStor's award winning IPStor(R) enterprise level software into select Acer Altos servers to deliver advanced storage networking solutions that maximize data availability, with unsurpassed scalability at an affordable price to customers on a global basis. The new, expanded agreement enables Acer to incorporate the full suite of FalconStor IPStor storage services including those designed to deliver business continuity, disaster recovery, performance optimization, backup acceleration and storage consolidation.

To address the growing needs of the small to mid-sized market, Acer will include the new FalconStor iSCSI Storage Server as part of their storage solution portfolio. The iSCSI Storage Server is the first fully featured, seamlessly integrated solution designed specifically for the Microsoft Windows Storage Server 2003(R) platform. FalconStor is one of the first companies to develop a technology that can transform the Microsoft Windows Storage Server 2003 into a unified storage platform, providing both file and block level services. The iSCSI Storage Server addresses the needs of SMB/departmental customers seeking to centralize and consolidate their storage, improve availability, consolidate backup, and provide offsite replication.

"The unique partnership we established with Acer nearly two years ago has yielded a wide variety of advantages for both companies," said Dr. Eric Chen, vice president and general manager, Asia Pacific Operations for FalconStor. "FalconStor recognizes the confidence placed in our technology by Acer, and we look forward to a long and mutually beneficial relationship as we continue to work together to deliver reliable, expandable, and easy-to-use storage solutions that get the job done."

To read the complete release, including the Safe Harbor agreement, visit www.falconstor.com/aceroem2.asp.