SUNNYVALE, Calif. - January 22, 2002 - MontaVista Software, Inc., the company powering the embedded revolution, today announced it has secured approximately $28 million in its third round of funding. New investors include IBM and Sony Corporation. Previous investors US Venture Partners, Alloy Ventures, Intel Capital, RRE Ventures and WR Hambrecht & Co., also contributed to this funding round. The total investment in MontaVista Software, since it was formed in 1999, is now more than $60 million.

"MontaVista revenues increased 250 percent over the past year. We achieved more than 250 customer design wins, of which more than 50 percent are with Fortune 100 and Global 500 corporations," said Jim Ready, MontaVista Software CEO. "The ability to secure additional funding in a tight market highlights MontaVista’s two-year record of impressive growth and sustained momentum. We are thrilled that this round of funding includes a number of top-tier venture capital firms and leading technology companies across key industry segments."

A recent Evans Data report forecast that the market for embedded Linux will grow by more than 140 percent over the next year, to jump past embedded software market leader Wind River. Another recent report from analyst group Venture Development Corporation (VDC) predicts that worldwide shipments of embedded Linux operating systems, software development tools and related services will increase from $28.2 million in 2000 to an estimated $306.6 million in 2005, a compound annual growth rate of 61 percent.

"The market for commercial embedded Linux products is growing at a tremendous rate, despite the downturn in the economy," said Stuart Phillips, general partner, US Venture Partners. "MontaVista Software has the management team and execution focus to be the leader in embedded Linux products."

"IBM has openly expressed corporate support for Linux, as part of its company-wide strategy," said Armando Garcia, vice president of Network Processors, IBM Microelectronics. "It makes sense for us to expand the already excellent working relationship between the two companies, by also investing in MontaVista Software, one of the industry’s leading embedded software companies."

"Through the Intel Communications Fund, Intel Capital invests in companies like MontaVista Software that develop communications and wireless building blocks," said Sam Arditi, vice president of Intel Corporation's Wireless Communications and Computing Group and director of Cellular Handheld Computing. "Our goal, through these investments, is to continue to enable Linux support for products based on the Intel® XScale™ micro architecture."

"After first becoming popular with individual programmers and then making inroads on commercial servers, Linux is now proving its merits in the embedded domain," said Masao Hori, deputy president, Network and Software Technology Center, Sony Corporation. "Based on the reliability and performance of MontaVista’s product, and the company’s close ties to the Linux community, we are confident Linux will become one of the leading embedded operating systems and that MontaVista Software will increasingly be an important player in the market."

MontaVista will use this additional round of financing to help fuel its engineering, support, marketing and sales capabilities. Specifically, it will continue to enhance the MontaVista Linux family of products to take advantage of significant new market opportunities for embedded Linux.

MontaVista Software, Inc. powers the embedded revolution by providing open-source systems software solutions for embedded developers. Founded in 1999 by real-time operating system (RTOS) pioneer James Ready, MontaVista's principal products include MontaVista™ Linux®, a Linux-based embedded source and binary distribution, cross development platform and a set of tool kits for x86/IA-32, PowerPC, StrongARM, MIPS, SH, ARM, XScale and other microprocessor architectures. MontaVista offers developers a family of products and services for embedded design and development targeted for applications ranging from communications infrastructure to consumer devices. MontaVista Software also provides several technology add-on products addressing specific customer needs such as the Java Development environment, High Availability technology, powerful graphics toolkits and more.

Headquartered in the heart of Silicon Valley in Sunnyvale, Calif., MontaVista Software is a privately held company funded by leading investors such as Alloy Ventures, US Venture Partners, RRE Ventures, WR Hambrecht + Co., IBM, Intel Capital and Sony Corporation. For more information about MontaVista Software, please visit http://www.mvista.com or email info@mvista.com or call (408) 328-9200.

Linux is a registered trademark of Linus Torvalds. MontaVista is a trademark of MontaVista Software Inc. All other names mentioned are trademarks, registered trademarks or service marks of their respective companies.

Contacts:

Joe Samagond
Director of Marketing and Corporate Communications
MontaVista Software Inc.
Phone (408) 328-9234
E-mail: jsamagond@mvista.com

Patricia Colby
PR Strategy and Business Development
Pacifico Inc.
Phone (408) 293-8600 ext. 340
E-mail: pcolby@pacifico.com