Nature of Operations

Radisys Corporation (NASDAQ: RSYS), a global leader in open telecom solutions, enables service providers to drive disruption with new open architecture business models. Radisys’ innovative disaggregated and virtualized enabling technology solutions leverage open reference architectures and standards, combined with open software and hardware to power business transformation for the telecom industry, while its world-class services organization delivers systems integration expertise necessary to solve communications and content providers’ complex deployment challenges. The Company operates in two primary segments, Software-Systems and Hardware Solutions.

•

Software-Systems products and services are targeted at delivering differentiated solutions for service providers to enable their deployment of next generation networks and technologies. This segment is comprised of the following differentiated offerings, all of which are aimed at enabling service providers to more rapidly adopt new technologies while driving down the costs of their network infrastructure.

◦

MediaEngine products are designed into IP Communications Networks, including the IP Multimedia Subsystem ("IMS") core of telecom networks, providing the necessary media processing capabilities required for a broad range of applications including Voice over Long-Term Evolution ("VoLTE"), Voice over WiFi (“VoWifi”), cloud communication platform as a service (CPaaS), Web Real-Time Communication ("WebRTC"), multimedia conferencing, as well as the transcoding required to achieve interoperability between legacy and new generation devices using disparate audio and video codecs. Evolution of the traditional media function to an all-IP virtual network function is critical for modernization of real time voice and video services. The Company's MediaEngine OneMRF strategy helps service providers consolidate their real-time IP media processing into a vendor and application agnostic platform, which drives cost out of their service delivery platform and enables accelerated deployment and introduction of new services. The Company sells virtualized, software-only vMRF for customers who require media processing in an Intel architecture and NFV platforms. The Company's MediaEngine provides the essential media processing capability that enables service providers to deliver audio, video and other multimedia services over their all-IP networks.

◦

MobilityEngine (previously disclosed as CellEngine) portfolio provides solutions for 4G, LTE-Advance and emerging 5G standards for RAN use cases including Centralized, Virtualized and Mobile (or Multi Access as it is now known) Edge Compute (MEC). Cloud or Centralized Radio Access Network (C-RAN) disaggregates the RAN baseband unit (BBU) from traditional eNodeB enabling it to run on common generic compute platforms, making network decisions more efficient compared to traditional cellular networks. Multi Access Edge Computing (MEC) is based on open platforms and software that allows virtualized applications to be deployed closest to the network edge to meet the requirements of ultra-low latency, real time network access and context needed for 5G, streaming video and massive IoT applications. The Company's MobilityEngine portfolio helps Original Design Manufacturers (ODMs), Original Equipment Manufacturers (OEMs) and Certified Systems Professionals (CSPs) build networks for these capabilities with accelerated time to market, reduced risk and lowered Total Cost of Ownership. One of the significant network re-evolutions is the 3GPP standards defines a vertical split for Central Unit (CU) - Distributed Unit (DU) as well as horizontal split for Control Plane - User Plane (CUPS). The Company's MobilityEngine software helps support these various options for flexible, scalable and programmable network deployment paradigms.

◦

FlowEngine products target the communication service provider traffic management market and is a family of products designed to rapidly classify millions of data flows and then distribute these flows to thousands of Virtualized Network Functions ("VNF"). FlowEngine offloads the processing for packet classification and distribution, improving virtualized function utilization and making the overall Network Functions Virtualization ("NFV") architecture more efficient. A FlowEngine system consists of FlowEngine software running on a Traffic Distribution Engine ("TDE") platform. FlowEngine Software enables communication service providers to efficiently transition towards NFV and software-defined networking ("SDN") architectures allowing increased service agility and quicker time to revenue for new service offerings. FlowEngine accomplishes this by integrating a targeted subset of edge routing, data center switching, and load balancing functionality, coupled with standards based SDN protocols, enabling our customers to significantly reduce the investment necessary to efficiently process data flows in virtualized communications environments.

◦

Also included in this segment is the Company's Professional Services organization that is staffed with telecommunications experts who are available to assist our customers as they develop their own unique telecommunications products and applications as well as accelerating specific features developed across our Software-Systems product families. The Company's strategy is to enable the efficient and cost-effective adoption of our Software-Systems products as well as enabling service providers to accelerate the adoption of open-standards based solutions as part of their next generation networks aimed at significantly reducing the total cost of ownership of their network infrastructure.


•	Hardware Solutions leverages the Company's hardware design expertise, coupled with the Company's manufacturing, supply chain, integration and service capabilities, to enable differentiation from our competition. The Company's products include the following two primary product families:

◦

DCEngine products include open-based rack-scale systems, utilizing Open Compute Project (OCP) accepted specifications, which enable service providers to migrate their existing infrastructure to embrace the efficiencies and scale of data center environments. This product suite brings the economies of the data center and the agility of the cloud to service provider infrastructure, allowing them to accelerate the transformation to cloud based compute, storage and networking fabrics utilizing the best of commodity components, open source hardware specifications and software coupled with world class service and support. The DCEngine platform enables service providers to drive innovation and the rapid scalable delivery of virtualized network functions at the network edge, enabling new services such as storage backup, video on demand and parental controls.

◦

Embedded products which includes our ATCA, computer-on-module express (COM Express) and rack mount servers. These products are predominantly hardware-based and include both our internal designs as well as increasingly leveraging third party hardware which incorporates our management software and services capabilities. Our products enable the control and movement of data in both 3G and LTE telecom networks and provide the hardware enablement for network elements applications such as Deep Packet Inspection ("DPI"), policy management and intelligent gateways (security, femto and LTE gateways). Additionally, our products enable image processing capabilities for healthcare markets and enable cost-effective and energy-efficient computing capabilities dedicated for industrial deployments. Our professional service organization of systems architects, hardware designers, and network experts accelerates our customers' time to market on these revenue generating assets.

While the Company will retain the ability to support their long-standing customer’s service needs given the extended nature of telecom deployments, many of the products within this portfolio have trended to end-of-life without future generation designs. Given the increased commoditization of hardware, coupled with the Company's strategy to drive increasing levels of our Software-Systems business, many customers had expected last time orders fulfilled over the course of 2017. As a result, going forward the Company expects to have a substantially smaller set of customers across these product lines.