Artisoft, Inc.
Product Strategy
overview

August 1993

The intent of this document is to provide Artisoft customers, resellers,
employees, shareholders and others who have a stake in the company, with
an overview of Artisofts product strategy.


Mission Statement
Artisoft, Inc. is dedicated to bringing innovative, easy-to-use,
cost-effective network communication solutions to individuals, workgroups,
large corporations and other growing organizations.

Summary
Artisoft intends to broaden its networking technology in the near future by
developing products that fill a broader range of users needs, from basic
file and printer sharing to high-end services such as multiplatform
connectivity, distributed networking and high-performance server software.
This will occur primarily through segmentation and additions to our network
operating system product line. The company will also place greater emphasis
on increasing core network services through additional enhancements in
network management, diagnostics and utilities. Artisoft plans to offer
network hardware and software solutions to meet business productivity
needs, while presenting to the reseller and end user a value that is
superior to competing products. Network solutions will include a scalable
set of network systems products, utilities, enhancements and hardware
products.

Product features and benefits will be developed to serve traditional
Artisoft markets and to attack significant new segments. Targeted markets
include entry-level systems, small-to-medium size businesses, workgroups
and large corporations.

The company plans to continue aggressively developing the technologies
vital to its ongoing success, but now is also pursuing OEM arrangements and
alliances to obtain additional technologies to fulfill its mission and
shorten the time to market. These may include the technologies for
utilities, hardware, groupware and other potential products, either as
standalone products or as core functions integrated into the LANtastic
networking product line.

We will pursue opportunities, including hardware as a part of the
networking system, when they are integral to the total solution required by
the reseller and end user, and where such products can assist in building
the companys overall market share. 
SALES CHANNEL
One of the companys key strengths is its extensive and experienced sales
channel. Artisoft products are available through all primary sources. These
include international, national and regional distributors, mass merchants,
mail order firms, superstores, traditional resellers, VARs, system
integrators and consultants. Many Artisoft resellers specialize in
providing networking solutions. They receive advanced training and have
passed stringent tests of their knowledge. They represent valuable
differentiation for the company as they provide the expertise end users
need to gain the most return from their networking investments.

Market Share Considerations - Total License Shipments
In 1991 Artisoft moved to a solid number two position in worldwide LAN
operating system shipments. The company increased its market share further
in 1992.
Market Share Considerations - PC Compatible Peer-to-Peer
In the same time frame, Artisofts LANtastic Network Operating System was
number one in the peer-to-peer worldwide market.


LANtastic continues to retain a large market share despite increased
competition in the peer-to-peer market place. The LANtastic Network
Operating System, a pioneer in the peer-to-peer segment, now faces
competition from approximately twenty companies. However, LANtastic is a
mature, feature-rich product that simply provides a superior means of
networking for a wide variety of users. The continued enhancement of
LANtastic should increase its appeal for a growing number of network
installations.
ARTISOFT PRODUCT STRATEGIES 
FOR VARIOUS LAN MARKETS

Since its entry into the networking market, Artisoft has concentrated its
efforts in the small-to- medium size business marketplace. Early research
showed that this market encompassed the largest number of potential
customers with a great need for improved productivity.

Artisoft remains committed to the market segments that represent the
greatest opportunity for sales. A recent survey in Computer Reseller News
indicates that the 1-34 user network size will continue to be more than 70%
of the market through 1996. However, product refinements and the companys
experience now make it feasible to reach out to additional market segments
represented by the larger installations.

Compilation of existing customer registration information and extensive
on-going end user proprietary research have established that most LAN
customers want file and printer sharing, ease of use, and reliability from
their local area networks. This applies to entry-level customers,
small-to-medium size businesses, corporate workgroups and large businesses.
However, each of these groups also has its own special needs. While
LANtastic v5.0 is a scalable solution in itself, designed to fit the
majority of needs of all market segments, future products will be developed
to specifically fit the needs of each segment on a more custom-tailored
basis.
     ENTRY-LEVEL systems
     DESCRIPTION
     Home use
     Small business 

Artisoft Opportunity
Entry-level version 
Artisoft perceives opportunity in providing an entry-level version of its
network operating system. This version would maintain the reliability and
ease of use, installation and maintenance that have created Artisofts
competitive advantage in the peer-to-peer arena, but would carry scaled
down administration, security and multiplatform connectivity. An
entry-level network would easily fit into Artisofts product line and could
be scalable, i.e. able to be integrated into a more advanced version as the
needs of the customers business change with growth. 

     SMALL-TO-MEDIUM SIZE BUSINESSES
     DESCRIPTION
     Businesses too small to 
     employ a full-time  
     network administrator


ARTISOFT SOLUTION
LANtastic Network Operating System v5.0 and beyond 
The current version of the LANtastic Network Operating System is an
award-winning, sophisticated, full-featured business networking solution.
It compares favorably with other vendors dedicated-server systems.
LANtastic v5.0 can easily accommodate networks from two up to hundreds of
computers. LANtastic distinguishes itself from competing peer-to-peer
products by its better performance, administration, multiplatform
connectivity and security; yet the system is low cost and easy to use. In
addition, a new version with increased emphasis on multi-protocol
connectivity and other high-end features is currently in development.
Distributed networking 
LANtastic networks function as either peer-to-peer networks, where
resources are shared flexibly; or as client-server networks, where
resources are tightly controlled; or in a configuration between the two 
whichever best meets the distributed networking needs of users. This means
that users can manage multiple computers to distribute resources,
distribute data and distribute processing in any combination they desire.

Administration 
There has been an increase in the average number of nodes in LANtastic
networks. As network size increases, so does the need for network
administration. This was addressed in LANtastic v5.0 by enabling
administrators to set up all user accounts from one server, manage those
accounts from one PC and even monitor or control any PC on the network.
Administration also includes managing resources such as printers.
Administering a LANtastic network will remain easy and flexible.

Multiplatform Connectivity
LANtastic v5.0 includes basic built-in multiplatform connectivity to
environments such as NetWare, UNIX and OS/2. Multiplatform support is
ideal for both large heterogeneous networks and departmental networks.
Artisofts optional connectivity series also offers LANtastic users
additional connectivity to Macintosh and TCP/IP networks. In future
versions, Artisoft will offer increased multiplatform connectivity through
both its networking system and add-on packages. Advanced peer-to-peer
features broaden LANtastics appeal to new market segments, while core
features of LANtastic continue to provide better networking for small and
medium-size businesses and for workgroups.

Security
LANtastic security is superior to that of all competitive peer-to-peer
products. Some businesses need only limited security, while others demand
extremely tight protection for their data. The LANtastic system, which
already offered tight security, now includes even file-level protection in
v5.0, with up to 14 levels of discretion available.

WORKGROUPS AND LARGE CORPORATIONS
Corporate America is an emerging market for peer-to-peer LANs and
distributed networking in general, and Artisoft plans to provide a strong
solution for this environment. In many areas, departmental workgroup
computing is similar to computing in small and medium-size businesses, but
a workgroup shares information both with its own members and with a
corporate network. This gives higher priority to remote connectivity and
multiplatform support. 


     LARGE CORPORATIONS
     Larger networks
     Corporate workgroups     

Artisoft Opportunity
Dedicated-server version of LANtastic
A dedicated server version of LANtastic is under development. It would
offer increased performance in I/O intensive, multi-user, database
applications. Although LANtastic currently can place the server in a
dedicated mode in a DOS-based operating system, even higher performance can
result from providing a version of LANtastic based upon a 32-bit,
multi-tasking operating system. Such a version could also provide the
corporate user with built-in connectivity to such network operating systems
as NetWare, Banyan Vines, IBM LAN Server, and Microsoft NT, LAN Manager
and Windows for Workgroups, as well as an upgrade path from other
LANtastic products.

OTHER ARTISOFT PRODUCTS AND THEIR PLACE IN 
PRODUCT STRATEGY

HARDWARE PRODUCTS
Networking hardware products from Artisoft are important to the total
solution approach to meeting customers needs. End users and resellers in
the small-to-medium size business markets find having a total solution in
a box both convenient and successful. Artisoft resellers and users can
turn to one source for all their software and hardware networking
requirements. 


Opportunity
Artisoft hardware technology can be aggressively marketed within various
networking segments. It also can be used to enhance acceptance of Artisoft
software products. The internal development of Application Specific
Integrated Circuits (ASIC) technology makes the company a highly
competitive player in the network adapter market. Artisoft clearly
recognizes the competition, eroding prices and lack of differentiation in
this market; however, because the company already possesses sophisticated
and appropriate technology, significant additional development expenses
will not be incurred to participate more aggressively in this market. 
Future hardware products that fit into a total networking solution could be
provided internally, as a joint venture with another industry leader, or
through an OEM partner agreement.

Network enhancements and utilities
As the user base and size of LANtastic networks expand, add-on products can
provide a number of solutions for these customers. Artisoft add-on products
could result from internal development or from strategic OEM partnering,
joint development or the acquisition of technology. Artisoft can build
these enhancements into the network operating system or present them as
standalone products. 
 
The total networking solution provided to resellers, VARs and end users has
proven to be an integral ingredient of Artisofts overall success. Artisoft
intends to consider incremental revenue opportunities in the following
areas:
      Interconnectivity, bridge and router technology; subsets include
wide area
       networks (WANs) and multi-protocol support
      Network management/diagnostics
      Network backup
      Fault tolerance

GROUPWARE
Groupware is a term for software that enhances the ability of business
people (typically teams) to collaborate on projects via networked
computers. Groupware includes electronic mail, conferencing, scheduling,
modem and fax services. According to Fortune (March 23, 1992), using
groupware can cut the time spent on team projects by an average of 90%.
Artisoft recognizes the emergence of groupware and its availability in some
network operating systems, and the company is evaluating use of elements of
its network conferencing technology and dictation system as potential
groupware applications. Groupware also represents an excellent area in
which to join with other industry leaders to offer users additional
services at lower cost than similar competitive products. Selling these
applications, which are optimized in networking environments, as standalone
products could produce incremental revenue; bundling them with LANtastic
could increase the companys differentiation and competitive advantage.

The future will bring greater emphasis on integrating the network with
other communication devices such as telephones. As an innovator of sound
and network technologies, Artisoft expects to continue efforts on such
integration. 


1993 Artisoft, Inc. All rights reserved. Artisoft and LANtastic are
registered trademarks of Artisoft, Inc. Other company names, brand names
and product names are the trademarks and/or the property of their
respective companies. This statement is one of present direction and 
does not guarantee that each product, technology or strategy will
ultimately be developed or implemented. 
The features described above are developmental and subject to change
without notice.

