MontaVista Software Caps Blockbuster Year; Leading Embedded Software Company Gains Customers, Revenues, Funding and Partners.

Business Editors/High-Tech Writers

SUNNYVALE, Calif.--(BUSINESS WIRE)--Jan. 22, 2002

MontaVista Software, Inc., the company powering the embedded revolution, today announced that it has ended its 2001 fiscal year with revenues growing 250 percent over 2000, despite the economic downturn. In 2001, MontaVista captured more than 250 customer design wins, more than 50 percent of which were with Fortune 100 and Global 500 corporations. In addition, the company reports that during the past year, its larger customers renewed their annual product subscriptions at rates exceeding 115 percent of their original purchase.

"MontaVista has demonstrated that its product subscription-based business model is valid and successful even as other embedded software companies, especially in the Linux space, continue to struggle," said Jim Ready, CEO of MontaVista Software. "The embedded Linux market is growing at a rapid pace. We expect to see Linux becoming the platform of choice for carrier-grade applications in telecommunications. We also predict the burgeoning use of Linux in name-brand digital consumer electronics. In 2002, MontaVista will leverage this growth and be recognized as the No. 1 embedded Linux company."

MontaVista has also secured approximately $28 million in a third round of funding from venture capital firms like US Venture Partners, Alloy Ventures, RRE Ventures, and WR Hambrecht & Co., and leading technology firms such as IBM, Intel and Sony Corporation.

During 2001, MontaVista established new alliances and expanded strategic relationships with semiconductor vendors including Toshiba, Hitachi, IBM, Intel, ARM, MIPS, Alchemy Semiconductor and Tensilica, and with embedded software suppliers such as Trolltech and IBM. In addition, the company added several Global 500 corporations to its list of customers, including Ericsson and Nokia.

"MontaVista continues to attract serious interest from major technology companies throughout the world," said Trent Winegar, MontaVista's vice president of worldwide sales. "Customer demand remains strong and we expect to do even better in 2002."

Furthering its commitment to a growing customer base, MontaVista significantly grew its sales and marketing force in 2001, opening new offices in Sweden, the Netherlands, Singapore and Hong Kong, and appointing four new vice presidents of marketing, worldwide sales, EMEA sales and Asia Pacific sales.

"Last year, we implemented a small layoff, in a prudent step to conserve cash in a difficult funding environment," said Dave Warner, MontaVista CFO. "MontaVista is once again ramping up and the company continues to expand in sales, business development, customer support and marketing."

In April 2001, the company introduced version 2.0 of its flagship product, Hard Hat(R) Linux(R), becoming the first company to market a product fully based on the newly released Linux 2.4 kernel. In keeping with MontaVista tradition and practice, the product was released on a single common source base across all leading target CPU architectures.

The company also provides a powerful Java development environment -- VisualAge(R) Micro Edition for MontaVista Linux. The MontaVista High Availability Framework, an open architecture platform, is targeted at telecom equipment manufacturers building fault-resilient systems based on CompactPCI and other industry standards. Customers also benefit from powerful graphics toolkits like MontaVista Graphics, a high-end open source graphics environment, and Qt/Embedded, an industry-leading graphics toolkit. In 2001, MontaVista's real-time preemptible kernel solution won a Linux Journal Editor's Choice Award.

"Because of our success, the MontaVista name is now well known among customers, partners and investors throughout the world," said Sheila Baker, MontaVista's vice president of marketing. "Going forward, we have decided to consolidate our marketing efforts around that single brand."

The next generation of the company's flagship product, to be announced next week, will be called MontaVista Linux, instead of Hard Hat Linux. All other future products will also be renamed to reflect the MontaVista brand.

About MontaVista Software, Inc.

MontaVista Software, Inc. powers the embedded revolution by providing open-source systems software solutions for embedded developers. Founded in 1999 by real-time operating system (RTOS) pioneer James Ready, MontaVista's principal products include MontaVista(R) Linux(R), a Linux-based embedded source and binary distribution, cross development platform and a set of tool kits for x86/IA-32, PowerPC, StrongARM, MIPS, SH, ARM, XScale and other microprocessor architectures. MontaVista offers developers a family of products and services for embedded design and development targeted for applications ranging from communications infrastructure to consumer devices. MontaVista Software also provides several technology add-on products addressing specific customer needs such as the Java development environment, High Availability technology, powerful graphics toolkits and more.

Headquartered in the heart of Silicon Valley in Sunnyvale, Calif., MontaVista Software is a privately held company funded by leading investors such Alloy Ventures, US Venture Partners, RRE Ventures, WR Hambrecht + Co., IBM, Intel Capital and Sony Corporation. For more information about MontaVista Software, please visit http://www.mvista.com or email [e-mail] or call 408/328-9200.

Note to Editors: Linux is a registered trademark of Linus Torvalds MontaVista is a trademark of MontaVista Software Inc. All other names mentioned are trademarks, registered trademarks or service marks of their respective companies.