Maxtor Says Goodbye to NAS

Feeling the squeeze of competition, hard disk drive giant Maxtor Friday bowed out of the network attached storage
(NAS) market, and canceling manufacturing and sales of its MaxAttach products.

“Since we entered the network attached storage business in the fall of 1999, the growth rate of this market has fallen
far short of expectations,” said Mike Cannon, president and chief executive officer of Maxtor. “Over the same period, the NAS market
has become rapidly commoditized by the entrance of a number of global OEMs with their own branded products. This has placed us in
competition with some of our largest hard disk drive customers. Exiting the NAS business will allow us to focus on our core hard
disk drive markets, further reducing expenses and accelerate Maxtor’s return to profitability.”

The company said it will not abandon MaxAttach customers entirely. Maxtor said it will continue to support end-users with installed
MaxAttach products under existing contracts, and will work with current NAS customers for an orderly wind down of the business.

As a result of the move, the company projects a third quarter charge of between $75 million and $85 million.