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Net One Systems and IBM Japan to Form Joint SNS Venture

Net One Systems Co Ltd and IBM Japan Ltd will establish as of September 2, 2002 a joint venture for providing integrated storage networking solutions. Called ProStorage Co Ltd, the new company will begin business activities on the same date. Net One Systems will invest 65% of ProStorage's capital of 200 million yen; IBM Japan will invest 35%. Osamu Sawada will be appointed president of the joint venture.

ProStorage will propose solutions with high added value while aiming to gain a foothold early in the market of IP-based storage area networks (IP-SAN), which has a strong affinity with the currently popular TCP/IP networks and is expected to grow rapidly in the future. By combining the technologies and know-how of Net One Systems and IBM Japan and optimally integrating the products from both companies to meet customer needs, ProStorage will develop and offer advanced, practical storage networking solutions that feature both high performance and reliability.

A leading company in the networking field, Net One Systems views storage as "a network infrastructure for efficient data sharing and exchange between applications." In order to expand its IP-based network solutions that have already been widely accepted for their technologies and know-how, it entered the storage market in June 2002 with the introduction of utility storage products from 3PARdata Inc of the U.S. With the establishment of ProStorage, Net One Systems will quickly offer services specializing in the network storage market and strengthen its organization to make it possible to provide high added-value solutions regarding networking infrastructures in all fields on a one-stop basis.

IBM Japan currently provides a wide range of storage products, including disk products supporting the Fiber Channel SAN, IP network storage products (such as NAS and iSCSI), gateway products integrating SAN and NAS, and tape products for data backups (such as LTO). The company has strengthened its product lineup with the introduction of two new products in August 2002: the Model 800 as part of the SAN-bound major product ESS and TotalStorage NAS 100 as part of the group of NAS products to be linked to IP networks. On August 7, IBM Japan also launched the IBM Network Storage Service, a total support service from current status analysis to building, operation and maintenance for customers building storage area networks. By positioning ProStorage as a new sales channel capable of providing its storage products and services not only to users of IBM-servers but users of non-IBM servers, IBM Japan will provide a larger number of customers with IBM's wide range of products and services and hence expand its network storage business.

With the establishment of ProStorage, one-stop service with higher customer satisfaction levels will become possible through building more integrated solutions in the network-based storage field.

About Net One Systems Co Ltd

Net One Systems Co Ltd was established in 1988 and became publicly held in 1996 by listing in the OTC. The company is engaged in the building of frontier-technology-used network computing systems, their operations and maintenance services including consulting and designing of optimum network systems to meet users' needs, procurement and installation of network equipment and software, related wiring works, development and introduction of applications to be operated on the networks and related operation management and maintenance. Network equipment accounted for 76% of fiscal 2000 revenues; media related merchandise, 7%; network computing merchandise, 1%; services and related works, 16%. The company has one consolidated subsidiary, which is based in Japan and engaged in the design and execution of communications works. Revenues from NTT Communications accounted for 15.7% of the total revenues. Mitsubishi Corp is the major shareholder with 20.37% of issued stock.