RadiSys Takes the Lead in ATCA Merchant Board Market Acquires Intel’s Modular Communications Platform Business RadiSys Corporation (NASDAQ: RSYS) agreed to purchase Intel Corporation’s (NASDAQ: INTC) modular communications platform business for US $25 million along with US $6.75 million of inventory and other considerations. The modular communications platform unit includes Intel’s CompactPCI, Advanced Telecommunications Computing Architecture (ATCA), and Advanced Mezzanine Card (AMC) boards for embedded communications. ACQUISITION ANALYSIS The motivating factor for RadiSys behind the acquisition was capturing the ATCA and AMC portions of the Intel business unit. RadiSys has been among the leaders in defining, investing in and selling standards-based embedded platforms for communications applications for more than a decade. By acquiring the Intel unit – RadiSys becomes the market leader for ATCA board revenues. The sale makes sense for Intel because it unloads what remained of the processor manufacturer’s single board computing business. Intel has long been one of the biggest proponents of ATCA from the architecture’s inception because ATCA provides a great vehicle for Intel to sell more of its processors into slots on embedded communications boards. Intel has always been more interested in filling the processor slots on embedded communications boards than in selling the boards themselves. This is an important point that astute observers of the xTCA markets understand, but that casual observers or investors might not. By exiting the ATCA board business, Intel is making no negative statements about its perception of the ATCA opportunity. Rather, Intel is simply executing a strategy that it has supported for a number of years, within a number of embedded markets. Intel invests in a strategy that takes the company further up the value chain in select hardware platform markets with Intel-branded boards, systems and sometimes software. This strategy produces many reference designs, a few commercially available products and any number of real-world success stories. Intel’s market development leadership through technology commercialization supports customers, the ecosystem, and the industry by developing platforms with sockets for Intel products. Intel certainly has a number of metrics that it evaluates when it elects to exist a ‘market development business’ – such as xTCA boards. It appears the calculus was run, and divestiture was the option. VDC believes that Intel’s sale of its ATCA business was a recapitalization of its ATCA market development business, not an exit from the ATCA market. We expect that some percentage of the funds realized from that sale will find their way back into MDF (market development funds) to be shared by a number of Intel ATCA embedded market partners.

This RadiSys acquisition was assisted when Anthony Ambrose, who formerly led the modular communications unit at Intel, joined RadiSys earlier this year as Vice President of Communications Networks. His familiarity with the Intel business should help ease the transition to RadiSys in addition to the fact that the majority of the Intel unit is based in the Portland, OR area – only miles away from the RadiSys headquarters. Most of the Intel modular communications platform staff that is not in Portland is in Asia. ‘Distraction’ from the integration of the Intel products, customers and resources should be minimal. RadiSys has a history of well-managed integration, and Intel’s interest in the success of the deal can be measured in the rate of new orders for Intel CPUs and chipsets from the combined operation. VDC believes that the risks are limited. This assessment covers both the hardware and the software dimensions to the technology that was acquired. VDC was queried by more than one industry veteran asking the question: Was there any value in the Intel shelf management portfolio? We ask: with all that RadiSys already has and does in system, platform and shelf management, why pay for an Intel offering that appears to have little share, and less traction? We offer two possibilities: 1. Intel offered a bundled deal only – and the terms made sense regardless of the value of the Intel SW portfolio

2. RadiSys believes that the Intel offering might present a novel feature or two – and perhaps they have seen more than the rest of us…

RadiSys expects the transaction to add a minimum of US $50 million of ongoing revenue per year. Based on our market intelligence, this number might be considered cautiously optimistic, but not aggressive. VDC’S VIEW The deal marks a milestone for ATCA market development – but will not turbocharge a market that is progressing, though too slowly for many. How will Intel participate in ATCA going forward? The biggest question mark surrounding the acquisition will be how Intel, one of the biggest proponents of ATCA, exiting the ATCA board market will be perceived by the greater ATCA ecosystem. Some will point to the sale of the Intel unit as a knock against ATCA because a market leader is exiting the market. The reality is, Intel is not exiting the ATCA market, they are simply moving on to their next phase of market development. Intel will continue to have a large stake in the ATCA market as the leading supplier of processors used on ATCA processing blades. What is good for the ATCA ecosystem will continue to be good for Intel, so VDC expects Intel to remain a major and active proponent of the ATCA ecosystem. The point is: It appears to us that Intel believes that the ATCA market has arrived at a point in its development that it no longer needs Intel-branded platforms to generate – but that does not mean that Intel is leaving the market.

RadiSys will provide world-class care and expertise for the customers of the modular communications platform unit than Intel could because the boards business falls within RadiSys’ core competency. For RadiSys, the acquisition furthers the firm’s position as an ATCA leader and will nicely complement its Promentum product family. The addition of the Intel ATCA unit makes RadiSys the leading ATCA board vendor. We believe that the biggest challenge for RadiSys and the market will be with former Intel board customers that happen to be RadiSys competitors. How many contracts, at what value, will be cancelled? For us, that is the question. And answering that question requires a much broader and deeper discussion on the structure and direction of competition in the ATCA market. Our guess? RadiSys will see little cancellation of the Intel backlog or pipeline if that book of business is concentrated in OEM, ISIs, or embedded systems vendors with real value-add above the backplane. ABOUT VDC Earlier this year, VDC released the report, AdvancedTCA and microTCA Components and Solutions, 2nd Edition: Global Market Demand Analysis, comprising an examination of the present and future markets for these emerging technologies. Included are current market sizes and forecasts through the year 2011, along with brief descriptions of the technologies involved. Trends are identified, markets analyzed, and strategies recommended. VDC recently launched an upcoming research report on microTCA Market Intelligence. This report includes important new, geographic, and technology coverage that is critical to understanding this rapidly changing marketplace. The microTCA platform has the unique ability to deliver an optimal technical and commercial profile to meet increased functionality, time-to-market constraints and cost reduction requirements. VDC believes that analysis on recent and near-term installations of microTCA will to assist in identifying microTCA impact in real-world implementation. This market intelligence will provide: • Definition and segmentation of current and emerging market opportunities

• Identification of proven microTCA value propositions realized by early adopters

• Proposed solutions in the target markets, segments and applications

• Estimates and forecast demand for microTCA products and solutions

• Screening, ranking and prioritization of client and segment opportunities

• Key success requirements and barriers to entry for the highest ranking opportunities

The proposal for this report can be viewed by clicking here.

Venture Development Corporation (VDC) is an independent technology market research and strategy consulting firm that specializes in a number of industrial, embedded, component, retail automation, RFID, AIDC, datacom/telecom, and defense markets. VDC has been operating since 1971, when the firm was founded by graduates of the Harvard Business School and Massachusetts Institute of Technology. Today, we employ a talented collection of analysts and consultants who offer a rare combination of expertise in the market research process; experience in technology product and program management; and formal training in engineering and marketing. VDC’s clients include thousands of the largest and fastest-growing technology suppliers in the world and the most successful investors participating in the markets we cover. For further information, contact: Eric Heikkila, Practice Director, Embedded Hardware and Systems Practice, 310.393.9086, erich@vdc-corp.com To purchase this report, contact: Tim Callahan, Sales Manager, 508.653.9000 ext. 113, timc@vdc-corp.com Tim Shea, Sales Manager, 508.653.9000 ext. 119, tims@vdc-corp.com

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