M-Systems' Latest Devices To Be Supported By Microsoft Windows CE .NET 4.2.

Business Editors/High-Tech Writers

Embedded Systems Conference San Francisco 2003

Booth 3003

SAN FRANCISCO--(BUSINESS WIRE)--April 23, 2003

DiskOnChip(R) Products Meet Local Storage Needs of Windows CE-Based

Devices, Saves Designers Parts, Integration Time and Board Space

M-Systems (Nasdaq:FLSH), a leader in flash disk data storage products, today announced that the Microsoft Windows CE .NET version 4.2 embedded operating system (OS), formerly code-named "McKendric," will include extended support for the DiskOnKey(TM) and DiskOnChip product lines.

Windows CE .NET 4.2 is the robust real-time embedded operating system for rapidly building smart devices, such as personal data assistants (PDAs), smart phones, set-top boxes (STB) and Internet appliances. A non-volatile alternative to mechanical disk drives, M-Systems' DiskOnChip product lines provide Windows CE-based devices with a reliable persistent storage solution in a small form factor without the space constraints, power requirements and data loss issues of hard drives.

By including M-Systems' TrueFFS 5.0, boot SDK and a ruggedized FS (RFS) for DiskOnChip in Windows CE .NET 4.2 newly presented third party CDs, OEMs are able to utilize DiskOnChip as an even more complete persistent storage solution in their design, allowing them to store the operating system image, registry entries, user data, drivers and applications onto the flash disk with 100 percent hard disk emulation, saving parts, integration time and board space.

Furthermore, with DiskOnChip's boot capability through its internal SRAM, Windows CE .NET developers further save board space and cost by running the system boot code directly from the flash disk, avoiding the need to have an additional external Boot ROM in the system.

M-Systems' flash disk products provide a seamless integration with Windows CE .NET 4.2 targeted to shorten embedded developers' time-to-market. The DiskOnChip line provides an easy-to-integrate, bootable local storage solution for a wide range of products.

Windows CE .NET 4.2 presents a newly developed file system named BinFS which allows better utilization of system resources when using NAND-based devices. The BinFS implements a demand paging mechanism for the OS files that enable a faster boot process, significantly lower RAM allocation, and a safer operation. TrueFFS as a standard block device driver in Windows CE .NET 4.2 allows seamless integration with BinFS and other FS available for Windows CE .NET 4.2. Windows CE .NET 4.2 also includes native support for the USB mass storage class driver, which allows Windows CE-based devices to use DiskOnKey.

"Storage management is a critical factor for OEMs building small-form-factor devices. With the storage enhancements in Windows CE .NET 4.2, OEMs will be able to incorporate M-Systems' innovative DiskOnChip data storage capabilities into their Windows Powered smart devices," said Scott Horn, director of the Embedded and Appliance Platforms Group at Microsoft Corp. "The combination of Windows CE .NET 4.2 and DiskOnChip technology can reduce space constraints, board costs and power management issues."

"Working with Microsoft has strengthened the growing support for DiskOnChip in Windows CE-based applications," said Chuck Schouw, president and CEO of M-Systems Inc. "The DiskOnChip product line has traditionally worked with Windows-based applications. We are excited to see the new operating system features and its USB connectivity for portable storage devices including our DiskOnKey. We will continue to develop our flash data storage technology for this increasingly sophisticated embedded market."

"M-Systems continues to target embedded and mobile developers and offer them the tools to bring to market quickly the next onslaught of smart connected mobile devices with reliable local data storage," said Yuval Sofer, associate vice president of business development at M-Systems and resident at the Microsoft Embedded Group. "Microsoft has recognized NAND technology as a main enabler for future smart devices. As Windows CE .NET is growing strong as the choice of embedded and mobile designs, we see an immense opportunity for DiskOnChip as it presents the most advanced and mature NAND-based persistent solution. We are glad to continue to provide the best flash solutions to the rapidly growing Microsoft developer community."

Microsoft is targeting this year's Embedded Systems Conference (Booth 3003) as the venue for the launch of Windows CE .NET 4.2.

About M-Systems

M-Systems is a leader and innovator of flash-based data storage products known as flash disks. M-Systems' flash disks provide the functionality of a mechanical hard drive in a silicon chip. M-Systems' products are based on its patented TrueFFS(R) technology, and target applications in a vast array of markets, including connected devices, mobile and telecom.

M-Systems' products include the DiskOnChip(R), DiskOnKey(R) and Fast Flash Disk (FFD(TM)) product families. For more information, contact M-Systems at www.m-sys.com.

This news release includes forward-looking statements as defined in the private Securities Litigation Reform Act of 1995. Readers are cautioned not to place undue reliance on these forward-looking statements, as they are subject to various risks and uncertainties which may cause actual results to vary significantly. These risks include, but are not limited to, risks related to: the effect of global economic conditions in general and conditions in the company's industry and target markets in particular, shifts in supply and demand, market acceptance, the impact of competitive products and pricing, product development, commercialization and technological difficulties, and capacity and supply constraints including dependence on flash component suppliers; changes in the company's and its customers' inventory levels; timely product and technology development/upgrades and the ability to manage changes in market conditions as needed; market acceptance of new products and continuing product demand; the impact of competitive products and pricing on the company's and its customers' products and markets; development, release and sales of new products by strategic suppliers and customers; development and growth of anticipated markets for the company's and its customers' products; and other risk factors detailed in the company's most recent annual report and/or in any of its other filings with the Securities and Exchange Commission. The company assumes no obligation to update the Information in this release. Reference to the company's Web site above does not constitute incorporation of any of the information thereon into this news release.

Note to Editors: High-resolution photo images of M-Systems' latest flash disk devices are available on the Internet at www.m-sys.com/content/news/photos.asp.

All company and product names mentioned may be trademarks or registered trademarks of their respective holders and are used for identification purposes only.