October 14, 2003
M-Systems' KeyComputing Partners with Seaside Software to Enable Mobile Exchange on the Smart DiskOnKey Platform
New Device Enables Location Independent Work for Exchange Users

FREMONT, Calif.--(BUSINESS WIRE)--Oct. 14, 2003-- M-Systems' (Nasdaq:FLSH - News) new subsidiary KeyComputing, has joined forces with Seaside Software in the development of Xkey(TM), a key-sized appliance for Microsoft Exchange® users. The Xkey packages the mobility and computing power of the Smart DiskOnKey® platform with Seaside's Portable Web Services Software. The combination results in an innovative USB flash device that enables users to access Exchange data easily and securely from any PC.

"KeyComputing's strategic partnership with Seaside Software demonstrates the incredible capability of the Smart DiskOnKey platform as more than just a simple storage solution," said Daniel Schreiber, managing director of KeyComputing. "The Xkey brings together two complex technologies into an easy-to-use functional business tool for today's enterprise requirements for mobility and low cost implementation."

Enabling "location independent work" has been a major challenge for enterprise, with little progress being made for the majority of knowledge workers who do not have laptops. The Xkey is a company-managed appliance that, for a fraction of the cost of a laptop, enables employees to connect and work from home without taxing IT resources or risking security breaches.

"Companies with remote Outlook users can consider a number of alternatives for accessing their Exchange server," said David Ferris, president and analyst of messaging consultancy at Ferris Research. "The downside is they either add significant cost and complexity, such as VPNs, wholesale client/server upgrades, or drop major functionality including offline use in the case of Outlook Web Access. With the Xkey, users get rich client features like offline use, synched online performance, archiving, but sidestep issues caused by worms such as MSBlaster while delivering Exchange to remote users."

Xkey offers Triple DES encryption to secure the Exchange data stored on the device and contains an embedded SSL VPN to secure the communication between the Xkey and the Exchange server. Xkey substantially lowers the Total Cost of Ownership (TCO) for Exchange users on the go, requiring zero server-side changes and the entry of only a username and password by the end-user.

"Employees who are equipped to work from home typically put in an additional two to four hours of work a week. The overwhelming majority of knowledge workers remain immobile because the TCO of a laptop runs from $7,500 to $11,000," said Moshe Raines, CEO of Seaside Software. "The Xkey fundamentally changes the economics of workforce mobility, providing the security and manageability of a company issued appliance, with ease-of-use."

About M-Systems' Smart DiskOnKey Platform

The Smart DiskOnKey platform is comprised of unique patented solutions offering top tier partners the option to choose from M-Systems' existing product line or to design their own form factor while still using M-Systems' internal architecture. The award-winning DiskOnKey product line offers the fastest data transfer speeds combined with trusted quality, reliability, ease-of-use and assurance that information will be secured.

Furthermore M-Systems' Smart DiskOnKey platform offers partners unparalleled computing capability with the flexibility to extend the use of the device beyond simple storage to meet any variety of requirements. M-Systems' patented flash management software, True Flash File System (TrueFFS), is an integral component to the Smart DiskOnKey platform. TrueFFS transparently provides full flash media management offering unsurpassed data integrity and assurance.

About Seaside Software

Seaside Software is the leading provider of portable cached applications. The company's first two products HiPerExchange and Xkey bring secure portability, offline access and increased performance to users of Microsoft Exchange, all with VPN-less browser based access. Seaside's core technology eliminates the impact of WANs on network connectivity and application execution. Based in Redwood City, Calif. and founded in 2001, Seaside is backed by Israel Seed partners and other private investors. For more information, visit www.seasidesw.com.

About M-Systems

M-Systems (Nasdaq:FLSH - News) is a leader and innovator of flash-based data storage products known as flash disks. M-Systems' flash disks provide the functionality of a mechanical hard drive in a silicon chip. M-Systems' products are based on its patented TrueFFS® technology and target applications in a vast array of markets, including connected devices, mobile, and telecom. M-Systems' products include the DiskOnChip®, DiskOnKey® and Fast Flash Disk (FFD(TM)) product families. For more information, please contact M-Systems at www.m-sys.com.

Note: This press release includes forward-looking statements as defined in the private Securities Litigation Reform Act of 1995. Readers are cautioned not to place undue reliance on these forward-looking statements, as they are subject to various risks and uncertainties which may cause actual results to vary significantly. These risks include, but are not limited to, risks related to: the effect of global economic conditions in general and conditions in the company's industry and target markets in particular, shifts in supply and demand, market acceptance, the impact of competitive products and pricing, product development, commercialization and technological difficulties, and capacity and supply constraints including dependence on flash component suppliers; changes in the company's and its customers' inventory levels; timely product and technology development/upgrades and the ability to manage changes in market conditions as needed; market acceptance of new products and continuing product demand; the impact of competitive products and pricing on the Company's and its customers' products and markets; development, release and sales of new products by strategic suppliers and customers; development and growth of anticipated markets for the company's and its customers' products; and other risk factors detailed in the company's most recent annual report and/or in any of its other filings with the Securities and Exchange Commission. The company assumes no obligation to update the Information in this release. Reference to the company's Web site above does not constitute incorporation of any of the information thereon into this press release.

O'Leary and Partners Public Relations for M-Systems
Bryan Sherlock, 949-224-4035
KCSA Worldwide for M-Systems
Jeff Corbin or Evan Smith (Investor Contact) 212-682-6300
jcorbin@kcsa.com or esmith@kcsa.com

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