Dear Tropos Friends,

At the risk of restating what you our customers and partners already know, I thought I would use this last newsletter of the year to opine a bit on the direction of our metro wireless market.

As we move into 2008, we see our market building strong momentum around the world in several key segments, specifically consumer Hot Zones, DSL alternative in underserved communities and, most significantly, what I am calling "Municipal and Industrial Enterprise" applications. Muni applications are generally tied to public policy priorities such as safety and security, green tech, education, and economic development. In 2007, we announced many cities using our Wi-Fi mesh to support video surveillance, automated utility and parking meter reading, traffic management, and education applications. In many cases, these networks started by supporting one application, and then as users experienced the benefits, additional applications were added. The flexibility and control to easily and securely add a wide variety of applications and devices and add coverage and capacity when and where they are needed are the primary benefits of owning your own open, standards-based metro wireless broadband system versus "renting" a slower cellular data service from the phone company. Other benefits include the ability to leverage the wide diversity of standards-based embedded clients to deliver the range of applications that comprise a multi-use network and the ability to seamlessly extend municipal enterprise policies out to the mobile workforce.

We are also seeing strong interest in industrial applications, include mining and construction site automation and private security systems for ports and other critical infrastructure. All indications are that this market segment will continue to expand in the coming year.

In 2007 we used our market leadership and broad application experience to make many important advances in our software and hardware, enhancing the performance and end-to-end reliability of metro wireless systems. We are especially proud of algorithms we invented that improved the link between the end-user's client and our nodes, which we discovered is often the weakest link in the system. The success of our product strategy is reflected both in our continued leadership standing in market rankings produced by market analysts like Dell'Oro, and in performance rankings produced by testing firms like Novarum.

In 2008 we will continue to focus on features and programs that further reinforce why our customers and partners buy Tropos solutions - because "it just works." We will also further enhance our ability to run and manage the key applications I described above, for networks that start out small as well as ones that start out big. For more information about customers and the various applications they are running on their wireless broadband infrastructure, please check out our website.

As always, thanks for your ongoing support and Happy Holidays to you and your families.

Best Regards,

Ron Sege
President and CEO
Tropos Networks