NMS Strategy , and Comments on QWES Acquisition

1. NMS Strategy, andComments on QWES.com Acquisition R. Brough Turner Senior VP & Chief Technology Officer rbt@nmss.com

2. x10 1997 or1999 2002 or2004 “Packets” Overtake “Circuits” Packets 64 kbps

3. Communications Convergence • IP has won • Public networks being rebuilt but 1.2B existing phones Video IP +Web Voice E-Commerce Best Effort

4. 10-15 Years of Convergence in successive waves • Arbitrage -> now • Corporate tie lines -> now • IP backbones/ “softswitches” -> starting • IP-PBXs -> 2000 - 2005 • Mobiles w/ data -> 2000 - 2006 • End of Per-Minute Billing -> 2003-2007 ? • Quality of Service (QoS) technology supports bulk purchase of premium bits • Client-controlled services market

5. Web Browser chooses default Web Portal Web Portals HTTP Web Browser INTERNET with QoS SIP Phone calls directly ! SIP Phone chooses service provider Services SIP Internet Phone Deregulation by Technology SIP phones will do for voice what HTTP did for data!

6. Time to Market is Key • Changing times demand the utmost flexibility • Winners and losers in each new wave • Time to market is critical

7. Embedded Computers for Telecommunications Equipment • Fragmented components market • Until recently, most systems custom designed • System designs will remain highly dependent on volume and cost targets • low end and high end justify custom • but designed on PC workstations • Growing mid-range opportunity for Open Telecommunications

8. Open Telecom Opportunity Custom ASICs CompactPCI Industrial PCs Cost Embedded PCs Custom SOC Performance

9. Technology-Oriented Business Bets • Convergence defines the new network • Open Telecom the most timely way tocapitalize on the new opportunities • Software most important issue for Open Telecommunications • Wireless overtakes wireline, in stages

10. Convergence Defines the New Network • Fusion gateway technology • all the components for anything to anything • IP Media Server • Enhanced services in the converged network • NMS provides the technology

11. Convergence Technologies • Signal processing (DSP) • VoIP codecs, echo control, DTMF carriage • Fax, wireless vocoders • maximum performance per watt, per $, per cc • Media Stream Protocol Processing (MSPP) • flexible, low-latency processing of packets • jitter-buffers, frame packing, address translation • maximum performance per watt, per $, per cc • Signaling protocols • PSTN and IP - SS7, ISDN, H.323, MGCP, SIP, ... • richest set of call control protocols in our industry

12. AG 6000C

13. Open Telecom in the Network • CompactPCI • PC technology, PC software and PC price points for network deployments • major NMS investment paying off today • Embedded PC technology • PC technology and NMS technology on a blade • flexible form factors • can reach lower-than-PC price points • Focus on highly available systems issues for public network deployments

14. Software is Key • Long term vision - TAPI and Java / JTAPI and emerging web protocols will bring a wealth of new developers to telecom… but this is taking longer than expected… • NMS is working with and tracking Microsoft • NMS is working closely with Sun Microsystems

15. Software is Key • Long term vision - TAPI, Java/ JTAPI, the Web bring a wealth of new developers to telecom • Natural Access - powerful, intuitive, and extremely efficient • accessible at every level • best foundation for middleware, TAPI, JTAPI, ... • best foundation for new OEM systems • best platform to extend existing OEM systems • only forward-compatible, OS-independent platform Applications drive the new telecom industry

16. Wireless • Mobile phone growth rates consistently exceed market forecasts • E&Y forecast: wireless telecommunications exceeds wire line by 2008 • Wireless Internet access • hot topic today • part of 3rd generation wireless standards • in all new mobile phones by 2003 • Mobile phones outnumber PCs by 2005 • watch out Bill Gates

17. Wireless and NMS • Convergence technologies for Wireless • Switching platforms for new services • SS7 technology • Gateways for IP backhaul • In-building wireless controllers, gateways and interfaces • Anything to anything Wireless >> long term answer for client access 10-15 years of changeand opportunity!

18. NMS Acquisition of QWES.com • Overview of the announcement • Why we are so excited: • Tight fit & logical extension to NMS strategy • Big new market opportunity created • Why QWES.com such a great company • PolicyPoint Product and Capabilities • Market & product positioning • NMS and QWES.com synergies • The deal & the financials

19. NMS Acquires QWES.com • Privately held company, based in Tustin, Ca. • Founding team has long & deep experience in inter-networking and advanced networking services • Leading edge products in the QoS or bandwidth management market • Extension of NMS products and technology further into converged networks space • QWES.com executives and employees will play key ongoing roles at NMS

20. Quality of Service (QoS)Why is it important? • Internet promises huge new opportunities • Voice & other traditional PSTN media services • must capture the $$ in voice services • eCommerce • Application services • Private network and VPN services • Can’t be done effectively without QoS • New, converged, public network requires QoS • NMS customers who provide converged communications solutions need QoS solutions

21. Market Opportunity • Core target market: Bandwidth Management • $100M in ‘99 to $1.1B in 2002, CAGR 125% (Bear Stearns) • Driving service markets: • IP Telephony: $1.89B in 2001, CAGR 149% (F&S) • ASP services: $22.7B in 2003, CAGR 91%(IDC) • VPN services: $1.5B in 2003, CAGR 34%(US only, IDC) • Fast growing Services markets drive need for bandwidth management & traffic shaping capability

22. NMS Strategy • Technology leadership • Enabling HW & SW components focused on converged communications solutions • Partner model excellence • Target leading suppliers of communications solutions • Acquisition fits: • technology directions • go-to-market strategy and targeted customers … the leader in Open TelecommunicationsTM providing converged communications technologies to the world’s leading suppliers of communications solutions

23. Why QWES.com? • For starters - world class team with extensive backgrounds in multi-protocol internetworking and advanced networking services • have gotten to know them pretty well • At April VON, demo’d Policy Point with Fusion • Several shows since then - came to understand how important this techology is to our customers

24. PolicyPoint Shatters QoS Barrier • LAN/WAN, per application or per flow traffic, classification, shaping, metering and routing • enabling a service provider to offer, and bill for, defined QoS as part of a SLA with SLGs • Price/performance leadership • Flexible delivery options • OEMable unit as well as cPCI blade • Policy management schemas vendor independent and standards-based

25. Additional Technologies and Capabilities • High performance real-time packet processing • C6X DSP-based “softASIC” implementation • all IP and ATM processing in software • first release is ATM, but additional WAN protocols can be supported via SW-only updates • Web-based, remote provisioning, management & metering capability • a range of embedded systems technology

26. PBX IP Phone IP PBX Multimedia PCs VoIP Gateway Application Servers • PolicyPoint • Classification • Metering • Shaping • Routing IAD or Router The Product: PolicyPoint Public IP and VPNs • Edge device delivering LAN/WAN QoS • application-specific classification and SL guarantee support • wirespeed • price/performance leader • “softASIC” DSP s/w technology delivers flexibility and future revenue via field s/w upgrades

27. Enterprise Edge Core Network PolicyPoint Positioning • Packeteer • Vina • Accelerated • Mariposa • Xedia (Lucent) • Sedona PolicyPoint • OEMable • Low Price • Wirespeed • Scalable • SpringTide • Redback • Shasta (Nortel) • CoSine

28. PolicyPoint Target Customers • VoIP solutions vendors • Telcom & datacom equipment vendors building IP PBX’s and IADs • Service providers • as with many NMS built solutions are the end-customer, reached through OEMs

29. NMS and QWES.com • Together - Leaders in enabling technologies for converged networks • Technology expertise and market leadership • Aligned go-to-market strategies • Products & technologies are highly complementary • QWES brings: • Breakthrough critical technology and products for QoS • Complementary technologies mentioned before • C6X based high performance packet processing • web based remote management solution for service providers • NMS brings: • leadership in converged communications technologies • Telcom and media streaming core competence • Worldwide sales, marketing and support and consulting • Ability to manage distributed engineering and acquisitions • I.e. keep the people!

30. Financial Terms of the Agreement • Pooling of interests • 1.5 million shares of Natural Microsystems common stock exchanged for all outstanding shares, warrants and options of QWES.com • Expect closing in December 1999 • Impact on earnings: • no significant impact in 2000 • accretive in 2001 • More to say at January earnings call

31. Stay tuned • PolicyPoint global customer wins • PolicyPoint successive and complementary core components • PolicyPoint design and customization offerings

32. Telecommunications • Continuous gains in underlying technology • Memory, processors, fiber and radio bandwidth • Very small market penetration • Convergence means a new public network Substantial, long term, worldwide growth! Significant positive impact on humanity Open Telecommunications is the key Have Fun - Make Money !

33. Natural MicroSystems … the leader in Open TelecommunicationsTM providing convergence technologies tothe world’s leading suppliers of communications solutions