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Michael Brown, Chairman and CEO, Quantum: Page 12 of 19

Byte and Switch: Why not?

Nelson: This product is all software. The value proposition in NAS is in the software. Anybody can do the hardware. The R&D group for the Guardian 14000 is all software. There's one hardware guy.

Brown: We've really invested in R&D this year. We're not very popular on Wall Street right now because our earnings reflect the fact we've made all these product investments. [Ed. note: Quantum reported $126.6 million in research and development expenses, 11.6 percent, for its 2002 fiscal year. That was actually a decrease from the prior year, when it spent $130.1 million in R&D.] On the other hand, our financials don't reflect the fact that these will be contributing to revenue and will have some growth potential going forward.

Byte and Switch: Will R&D spending go down?

Brown: I don't know that it's going down. We have enough on the R&D line that I don't think we'll have to scale up.