Workday 100 Report

June 30th, 2006 marked the 100th workday for Blade Network Technologies (BLADE) – the industry’s #1 supplier of Ethernet, IP, and Application Switches for blade server systems.

Following is a progress report since I last wrote you:

• We are two months into our Fiscal Q3 (which began on May 1 and will end on July 31). June 2006 was the biggest month in the history of the business (including the period when we operated as BSSBU within Nortel).
  
• As of June 30th, 2006 (end of calendar Q1, 2006), our life-to-date Unit Shipments stood at 70,750 switches (1,556,554 Ethernet ports).
  
  This is a significant milestone and I want to take this opportunity to thank our customers, employees and business partners for the continued help and support.
  
• In May and June of 2006, we added over 64 new enterprises to the rapidly growing list of end customers who use our switches in conjunction with their HP and IBM blade server systems.
  
• On July 10th, 2006, BLADE won Broadcom’s 2006 Technology Innovation Award in recognition of the network innovation we’ve delivered in the rapidly growing blade server market.
  
• Our employee strength as of the date of this report is 85 (up from 42 on Feb 11, 2006 the day we came into existence). 46% of our employees are in the Engineering function (Hardware, Software, and Test), emphasizing our focus on innovation and building world-class networking solutions for the rapidly growing blade server market.
  
• During our first 100 work days we have successfully shipped:
  
  • 3 new hardware platforms
    
  • 7 new software releases
    
  • RoHS compliant versions of all existing products (12 products in all!)
    
  • The industry’s first blade server switch to deliver 10Gbps connectivity to blade server systems
  
  Given the magnitude of the transition we had to undertake as we carved out from Nortel to become a standalone company, and the task list associated with the complex transition, we are extremely pleased to report that we delivered on our engineering commitments to our customers.
  
• This past month, BLADE became the industry’s first supplier of network infrastructure to ship a 10 Gigabit Layer 2-3 switch for blade server systems.
  
• Our new labs in Santa Clara and Ottawa are fully operational. We moved over 200 tons of equipment housed in over 80 racks over the Memorial Day weekend. This move that took months of planning was executed, much to our customer’s delight, without any disruption to engineering schedules and customer commitments.
  
• Our Customer Executive Briefing Center is complete and proudly showcases all the blade server switches we build and supply for the HP Blade System and IBM BladeCenter.
  
• We have, in record time, successfully transferred the Bill-of-Materials (BOM) and other relevant engineering data for all of our products from the Nortel Product Data Management system to our own PLM (Product Life Cycle Management System).
  
• In addition, BLADE engineers have completely weaned off Nortel’s development infrastructure and are using BLADE’s brand new and state-of-the-art development environment. The new development environment at BLADE has reduced the time it takes BLADE engineers to successfully compile a new release of software from 6 hours to under 10 minutes! The employees of BLADE thank Nortel for the outstanding support we received during the transition.
  
• Our Marketing and Engineering teams have spent the last 30 days planning our roadmap for 2007 and 2008. Relevant details of this roadmap will be shared with our customers over the coming weeks. BLADE’s product strategy is to deliver innovative and functionally rich Network I/O products for blade server systems at unprecedented price-performance levels. Our customers can expect us to deliver new and innovative products in the areas of 10G connectivity, iSCSI SAN connectivity, Network Virtualization, and Blade Rack Management.
  
• “Kaizen” continues to provide the foundation of everything we do at BLADE every day. This rigorous, but time-tested and proven methodology is key to our success. In the long run, it will help us achieve operational excellence and will have a material impact in our efforts to become the industry’s most trusted supplier of network infrastructure for blade server systems.
  While it is still early days in our implementation of Kaizen as the fundamental operating philosophy at BLADE, we’re very encouraged by how Kaizen is helping us implement world-class processes, eliminate costly errors, reduce waste, and build a healthier business.
  
  Please visit our new on-line picture gallery at http://www.bladenetwork.net/pages/about_us_photos.html to see the progress we’re making at BLADE.