Presentation Material by Akira Yamanaka, Corporate Vice

Fujitsu’s Server Strategy

July 22, 2004

Akira Yamanaka Corporate Vice President Group President, Server Systems Group Fujitsu Limited

1. Market Trends and Current State of Server Business

2. Our Server Business Strategy

3. Server Business Initiatives

Summary

-3- All Rights Reserved © Fujitsu Limited 2004 Market Trends z Avg. Market Growth Rate – Worldwide: + 4%, Japan: - 3% z Avg. Worldwide Growth Rate for IA Servers – + 10% (IPF*: about + 100%) z Worldwide Growth Rate for UNIX Servers – -1%

Worldwide Server Market by OS (units) Server Market Size (value) 2003 2006 60 ($B) Total 5.28 M units 7.75 M units Avg. Growth Rate: + 4% UNIX .66 M(13%) .82 M(11%) 50 Linux .83 M(16%) 1.84 M(24%) Windows3.35 M(63%) 4.78 M (62%) 40 Average Growth Rate for Linux: 31% Worldwide Server Market by CPU Type 30 (share by value) 100% WW 14% MF 10% 20 UNIX 37% 43% 8% Avg. Growth Rate: -3% 50% 1% IPF 10 45% Japan 43% IA 0% 2003 2004 2005 2006 2003 2006 2003 2004 2005 2006 *IDC defines the following categories: *Source: IDC Worldwide Server Quarterly Forecast, Q1 2004 CISC: MF, RISC: UNIX, EPIC: IPF (Itanium Processor Family), x86: IA -4- All Rights Reserved © Fujitsu Limited 2004 Fujitsu’s Share of the Server Market z Fujitsu Group’s Share: 6% of Worldwide Market (2003) – No. 5 : 22% of Japan Market (2003) – No. 1

Worldwide Server Market Share (2003) Japan Market Share (2003)

Fujitsu Dell Group 4% 6% Sun 7% Fujitsu IBM 22% 32% Hitachi TotalTotal $51B$51B 12% TotalTotal ¥¥ 771B 771B IBM Dell NEC HP 20% 8% HP 14% 27% 16% Sun 12%

*Source: IDC Worldwide Server Quarterly Tracker, Q1 2004 *Source: IDC Japan’s Server Quarterly Model Analysis, Q1 2004

(Consolidated(Consolidated Basis)Basis) Operating Net Sales Profit Margin (unit: ¥ billion) 20% ¥ 382.8 ¥ 395.0 ¥ 365.6 (+ 8％) 400 (- 4%)

10% 200 Net Sales

Operating Profit Margin

- 0% FY 2002 FY 2003 FY 2004 (forecast)

*Server-Related Products Business: Includes servers plus storage systems and other products

zDevelopment Structure Mainframes GS Fujitsu UNIX Servers PRIMEPOWER Fujitsu Mission-Critical IA Servers under development Fujitsu IA Servers PRIMERGY Fujitsu Siemens Computers zSales Structure Japan/Asia-Pacific/Americas Fujitsu EMEA Fujitsu Siemens Computers

Europe/Middle East/Africa Japan/Asia-Pacific North America

Mission-Critical IA Server PRIMEPOWER

Fujitsu Computer Systems Corp.

PRIMERGY

z FY 2003: Open Systems’ Share of Total Server Sales – 62% Percentage of Overseas UNIX Server Sales – 54%

Composition of Sales UNIX Server Sales Ratio (by server type) (units) Overseas Growth Rate + 91% (FY 2002-3) 100% 100% Mainframes, Others Japan 90% 90% 75% 46% 80% 80% 70% 64% 62% 70% 61% 42% 60% 60% 50% UNIX Servers 50% 40% 40% 30% 30% Overseas 20% 20% IA Servers 10% 10% 39% 54% 58% 0% 0% FYFY 2002 2002 FYFY 2003 2003 FYFY 2004 2004 (forecast) (forecast) FY 2002 FY 2003 FY 2004 (forecast)

Centralized Distributed Consolidation/Data Centers (1980s) (1990s) (2000s)

分散 DB

Web Information HUB Broadband Internet Other Companies

Central Host Client/Server WEB Services, Utility Computing

Features zCentralization zLow-cost zBuilding systems optimized for business servers processes and data zPerformance zOperating zEfficient use and optimal allocation of resources Tech- cost zSimple operation of heterogeneous environments nology Require- ments z Scale-out, scale-up z Virtualization, autonomic, integration technologies

Mission zProvide servers for socioeconomic infrastructure systems zRapidly respond to customers' diverse and changing needs zAssure continuity of customers' assets

Our Strategy

Continue leadership in mission-critical systems ~ Commitment to developing core technology ourselves z High reliability, high quality, high performance, leading-edge technology Focus on and aggressively promote ‘open’ servers z Solaris, Linux, Windows Expand server business on a global basis z Tripartite business structure: Japan, US, Europe

GS - Assure continuity of Mission- customers’ assets Critical Launch new model in 2006 Systems Mission-Critical PRIMEPOWER IA - Ensure reliability with GS Server PRIMEPOWER Fujitsu-developed hardware - Leverage rich applications portfolio for Solaris Unify product offerings with Sun in 2006 PRIMERGY IA Servers： - Fully leverage openness of Depart- Linux/Windows mental - Differentiate through high Systems reliability and quality [MSP/XSP] [Solaris] [Linux/Windows] Introduce mission-critical IA server in 2005

-13- All Rights Reserved © Fujitsu Limited 2004 Server Development Strategy Deliver Mission-Critical Performance and Openness z Utilize common Fujitsu mission-critical technology in all server offerings z Leverage joint development tie-ups with global players Strategic Mission-Critical GS PRIMEPOWER Development IA Server Alliances Commitment to Mission-Critical Technology Scalability Continuous Operation Autonomic Control

Processor, Processor, Chipset, Server Developed server server Developed by Fujitsu developed developed by Fujitsu byby FujitsuFujitsu

PRIMERGY Greater Efficiency Unified products w/ Joint Development Through Cooperation Sun Microsystems with Fujitsu with Partners in High Siemens Volume Areas Computer

Mission- GS PRIMEPOWER Critical IA Servers Shared Shared Shared StructuralStructural Elements Elements Shared DevelopmentDevelopment Ratio* Ratio* DevelopmentDevelopment Ratio* Ratio* 90% Processor --- 75% Chipset (ASIC) 20% 30% Firmware 30% 80% Components 60%

*Ratio*Ratio of of common common items items in in new new model model development development GS Processor PRIMEPOWER z 40% Reduction in Overall Costs Processor

DifferentiatedDifferentiated portion portion

Fujitsu is Japan’s only vendor able to leverage its mainframe technology heritage to develop its own processors and servers

Mainframe Vendors Processor IBM Developers/Vendors

C o m Customers High-End Server p r e HP h Developers/Vendors e Software & n s /Services i v e Lifecycle Platforms Management S o l u TRIOLE t i Electronic o Dell n Devices n s atio Software and Services egr Int Vendors

Mission-Critical PRIMEPOWER GS IA Server PRIMERGY

DevelopedDeveloped byby FujitsuFujitsu // StrategicStrategic AlliancesAlliances

Transmigration Market SME Mainframe Market Japan Market Fujitsu Customers: Market About 2,300 Fujitsu Customers: Fujitsu Customers: companies About 40,000 About 4,000 companies companies Solaris Market IPF Market New Growth 63% of UNIX Market Market (¥ 700 B) (¥ 500 B in 2006) Markets in which we can Overseas Fujitsu Customers: leverage our Markets About 1,000 mission-critical companies IA server

3.1 Continuing Leadership in Mission-Critical Systems Commitment to developing core technology ourselves 3.2 Striving for Further Growth

Fully Capitalizing on Our Core Strengths Leading-Edge Semiconductor Server Development Technology Technology z 90nm technology z 10-layer copper z Mainframe-class reliability Combined wiring + Low-k(*) technology Power z High integration & low z Supercomputer-based high- power consumption speed technology

(*) Low-Dialectic Interlayer Insulation, Reduces size circuitry requirements

World-Class Servers Using Mainframe Technology to Deliver High Reliability

Processor Technology Guarantees Data Integrity

SPARC64 V High-Reliability Design Architecture Error Detection Feature PRIMEPOWER Processor GS Processor ECC Tag Cache Memory (L1 Dual Parity） Data Protection Data ECC Cache Memory Dynamic ○ Degradation Computer/Register Parity Error Detection Hardware Instruction Retry ○ Hardware-based error detection History ○ and self-healing

Technology Hardware-based error detection Exclusive to Fujitsu No impact even if error occurs

PRIMEPOWER2500 Company A (example) PRIMEPOWER’sPRIMEPOWER’s Continuous Dynamic Dynamic Continuous Degradation Degradation OperationsOperations Hot Swap Hot Swap Redundancy Redundancy TechnologyTechnology

CPU PlannedPlanned Memory StoppageStoppage

zSelf-diagnosis for Planned Back Plane Crossbar Stoppage error prediction monitoring function System Board NotNot SystemSystem AvailableAvailable StoppedStopped zSelective power Service Processor shut-down function

Power Source / Fan zAutomatic isolation of failure location I/O Card

Disk

UNIX Servers with Best-in-Class Performance on a Variety of Industry Benchmarks World-class performance at processor and overall system levels SPECjbb SAP TPC-H SPEC OMP Java Applications SAP ERP Decision Support Parallel Processing

SPARC 64V PRIMEPOWER High-Performance Technology High-Performance Technology z Out-of Order z World-Leading Scalability z 4-Instruction Parallel Decode (Expandable to 128 CPUs x 128 Nodes: 16,384 /6-Operation Parallel Execution CPUs) z Fiber-optic Interconnect Technology z 3MB On-Chip L2 Cache (4GB/s) z System Bus Performance (133GB/s)

663,133 700,000 [ops/s] 574,912 600,000 553,480

500,000 No1

400,000

SPARC64 V 1.5GHz 1.7GHz 300,000 1.89GHz

200,000

100,000

0 Fujitsu Co. A Co. B *Source: SPEC web site (http://www.spec.org/) 2004.6.22 * SPECjbb2000 : Benchmark measuring processing performance for servers running Java software. Simulates enterprise inventory management and order processing. -24- All Rights Reserved © Fujitsu Limited 2004 High Performance Our Processor Development Roadmap

PRIMEPOWER SPARC Processor Roadmap

SPARC64SPARC64 VI VI + + 2.1(scheduled) 65nm65nm 1.7(scheduled) SPARC64 VI 1.5 2.4GHz 2.16GHz 90nm CPU Performance 90nm Comparison 1.0 New Product Dual Core Processor 1.89GHz 0.7 SPARC64 V 90nm 1.35GHz World’s SPARC64 GP First 130nm 810MHz 150nm Mainframe-class RAS technology

2002 2003 20042005 2006 2007 * Roadmap is subject to change without notice.

Design Quality Component Quality z Thorough logic verification through z Exhaustive component evaluation using document-driven, team-based group of specialists including scientists (including production) approach z Evaluation of components/materials, z LSI design using simulation technology design/functionality confirmation to ensure high margins z Structural analysis of components Quality Assurance using scanning electron z Test programs by third parties Team microscope Design Production Product Quality Team Team Mass Production Quality z Overall system testing, including middleware z Structural designers help ensure quick and stable mass production quality z Independent quality assurance organization makes final decisions on z Prototype automation to prevent human-

product’s ready-to-ship status BBC-BlackBBC-Black Box Box caused inconsistencies ClipClip tester tester z Automated clip failure test (BBC) CTF-ChannelCTF-Channel z Vibration, heat tests to eliminate damage Test Facility Virtual IO failure test (CTF) Test Facility during shipment

AutomatedAutomated Server quality status: clipclip failurefailure Top-level in industry: 70% (1QFY03) 95% (4QFY03) testertester -26- All Rights Reserved © Fujitsu Limited 2004 Proactive Environmental Protection Efforts

FujitsuFujitsu hashas rankedranked #1#1 forfor fivefive successivesuccessive yearsyears inin thethe computercomputer industryindustry segmentsegment ofof thethe DowDow JonesJones SustainabilitySustainability IndexIndex

z Products That Are Energy Efficient and Super-Green Products Incorporate the “3R’s”: Reduce, Reuse, Recycle PRIMERGY Blade Server Energy saving (1/3) All 2005 server models to meet energy- Space saving (1/7) saving standards Reuse and recycling of plastic casing and packing materials z Efforts to Eliminate Harmful Materials Elimination of six substances* targeted for end of FY 2005 *mercury, lead, chromium VI, cadmium, PBB, PBDE

PBB:PBB: polybrominated polybrominated biphenyl biphenyl PBDE:PBDE: Polybrominated Polybrominated diphenyl diphenyl ether ether

-28- All Rights Reserved © Fujitsu Limited 2004 Advancing Autonomic, Virtualization & Integration Technologies – Toward Utility Computing Providing Virtual/Autonomic Functionality in Addition to Superior Reliability, Quality and Performance TRIOLE ETERNUS Reduced Operating PRIMEPOWER Expenses PRIMERGY Autonomic Efficient Utilization of AutonomicAutonomic OperationOperation Hardware Resources inin AccordanceAccordance withwith Resource Customer’sCustomer’s RulesRules Coordinator Provisioning Reduced DynamicDynamic ProvisioningProvisioning ofof ServersServers && Operating Burden StorageStorage inin AccordanceAccordance withwith ChangesChanges inin OperationalOperational Virtualization, LoadLoad Visualization Benchmark with TRIOLE Model:

Service Level Improvement Level Service QuicklyQuickly DetermineDetermine ProblemProblem Systemwalker / Resource Coordinator AreasAreas inin ComplexComplex SystemsSystems Identification of cause of delay: from 1 hr 15 mins. to 3 mins.

Global Business Expansion Through Strategic Alliances with Major Global Industry Players OpenOpen systemssystems developmentdevelopment throughthrough alliancesalliances withwith strongstrong playersplayers

FlexFrameFlexFrame (SAP(SAP solution) solution) UNIX Servers Mission- /Solaris Critical IA Commitment to developing Server core technology ourselves Linux Windows

Strategic Development Partnerships

～～FYFY 20032003 FYFY 20042004 FYFY 20052005～～

Strengthen Business Strengthen Sales Accelerate Business Infrastructure and Capability through Development by Organization in Three Global Expansion of Strategic Alliances Main Markets TRIOLE with Global Partners

Europe:Europe: WinWin newnew globalglobal customerscustomers PromotePromote platformplatform zz ExpandExpand shareshare ofof withwith PRIMEPOWERPRIMEPOWER integrationintegration modelmodel inin closeclose UNIXUNIX marketmarket throughthrough cooperationcooperation withwith FSCFSC && FSFS unifiedunified productproduct offeringoffering PRIMEPOWERPRIMEPOWER Customers:Customers: (APL)(APL) withwith NorthNorth America:America: SunSun MicrosystemsMicrosystems Japan/Japan/ PromotePromote expandedexpanded salessales Asia-Pacific: about 2,300 Asia-Pacific: about 2,300 toto FortuneFortune 500500 companies,companies, zz WinWin businessbusiness inin newnew Particularly by FCS & FC Particularly by FCS & FC IPFIPF marketmarket withwith mission-mission- Europe: about 800 (FSC) Europe: about 800 (FSC) criticalcritical IAIA serversservers China/Asia-Pacific: China/Asia-Pacific: (Linux,(Linux, Windows)Windows) N.N. America:America: aboutabout 200200 (FCS)(FCS) SolutionSolution businessbusiness tie-upstie-ups centeringcentering onon FCHFCH && FAPLFAPL

FSC:FSC: Fujitsu Fujitsu Siemens Siemens Computers Computers FS: FS: Fujitsu Fujitsu Services Services FCH: FCH: Fujitsu Fujitsu China China Holdings Holdings FCS:FCS: Fujitsu Fujitsu Computer Computer Systems Systems FC: FC: Fujitsu Fujitsu Consulting Consulting FAPL: FAPL: Fujitsu Fujitsu Asia Asia Pte. Pte. Ltd. Ltd. -31- All Rights Reserved © Fujitsu Limited 2004 Strategic Roadmap

2003 2004 2005 2006 2007

SupportSupport ThroughoutThroughout Customer’sCustomer’s ITIT SystemSystem LifecycleLifecycle GSGS Next GS21GS21 Next GS21GS21

SolidifySolidify HoldHold onon Sun Microsystems FurtherFurther globalglobal expansionexpansion SolarisSolaris MarketMarket PRIMEPOWERPRIMEPOWER Fujitsu-Sun Fujitsu, SUN PRIMEPOWER New PRIMEPOWER Fujitsu, SUN PRIMEPOWER New PRIMEPOWER Product Integrate 1.35GHz1.35GHz 1.89GHz1.89GHz Integrate Cross-Supply ProductsProducts (APL)(APL)

Intel SeizeSeize OpportunitiesOpportunities Mission-CriticalMission-Critical Next-Generation Red Hat Next-Generation Mission-Critical inin High-GrowthHigh-Growth Processor SuSE IAIA ServerServer Processor IA Servers Markets IAIA Markets Microsoft ServersServers BladeBlade FaultFault TolerantTolerant ServersServers ServersServers PRIMERGY

StorageStorage systemssystems thatthat guaranteeguarantee StorageStorage protectionprotection ofof customer’scustomer’s datadata ETERNUS SystemsSystems ETERNUS ETERNUS NextNext 3000/60003000/6000 ETERNUSETERNUS

Software & Services Systems Integration Outsourcing Support

Storage Middleware SERVERS Network

Technologies

Semiconductors

z Customer-centric perspective z Commitment to developing core technology ourselves z Strive for further business growth Proactive response to open systems trends

-33- All Rights Reserved © Fujitsu Limited 2004 -34- All Rights Reserved © Fujitsu Limited 2004 Cautionary Statement This presentation may contain forward-looking statements that are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Words such as "anticipates," "believes," "expects," "estimates," "intends," "plans," "projects," and similar expressions which indicate future events and trends identify forward-looking statements. Actual results may differ materially from those projected or implied in the forward-looking statements due to, without limitation, the following factors:

•general economic and market conditions in the major geographic markets for Fujitsu's services and products, which are the United States, EU, Japan and elsewhere in Asia, particularly as such conditions may effect customer spending; •rapid technological change, fluctuations in customer demand and intensifying price competition in the IT, telecommunications, and microelectronics markets in which Fujitsu competes; •Fujitsu's ability to dispose of non-core businesses and related assets through strategic alliances and sales on commercially reasonable terms, and the effect of realization of losses which may result from such transactions; •uncertainty as to Fujitsu's access to, or protection for, certain intellectual property rights; •uncertainty as to the performance of Fujitsu's strategic business partners; •declines in the market prices of Japanese and foreign equity securities held by Fujitsu which could cause Fujitsu to recognize significant losses in the value of its holdings and require Fujitsu to make significant additional contributions to its pension funds in order to make up shortfalls in minimum reserve requirements resulting from such declines; •poor operating results, inability to access financing on commercially reasonable terms, insolvency or bankruptcy of Fujitsu's customers, any of which factors could adversely affect or preclude these customers' ability to timely pay accounts receivables owed to Fujitsu; and •fluctuations in rates of exchange for the yen and other currencies in which Fujitsu makes significant sales or in which Fujitsu's assets and liabilities are denominated, particularly between the yen and the British pound and U.S. dollar, respectively.