Diamond Multimedia Announces Shipment of DSL-based SupraSonic 1-Meg Modem for Nortel Networks.

VANCOUVER, Wash.--(BUSINESS WIRE)--Feb. 10, 1999--

New, Co-Developed DSL Modem Uses Nortel Networks' 1-Meg Modem

Technology; Bell Canada Implements Large-Scale Deployment of 1-Meg

Modem Service in 100 Central Offices

Diamond Multimedia Systems, Inc. (Nasdaq:DIMD), a leader in PC multimedia and Internet connectivity, today announced the shipment of its SupraSonic DSL 1-Meg Modem for Nortel Networks (NYSE:NT/TSE:NTL).

The new DSL (digital subscriber line) modem, co-developed by Nortel Networks and Diamond Multimedia, uses Nortel Networks' award-winning 1-Meg (one megabit per second) Modem technology to deliver high-speed, dedicated access to the Internet. Diamond Multimedia and Nortel Networks are distributing the SupraSonic DSL 1-Meg Modem through selected channels.

Nortel Networks has purchased an initial supply of 1-Meg Modem Network Interface Cards (NICs) from Diamond Multimedia, and is now offering these specialized modems as an extension to its 1-Meg Modem CPE portfolio.

Recently, Bell Canada implemented one of the largest deployments of splitterless DSL service in the world by enabling capabilities in over 100 central offices that cover over 2 million households in the regions of Ottawa/Hull, the greater Toronto area, metropolitan Montreal, and Quebec City.

"We teamed with Nortel Networks, a global supplier of digital network solutions, to bring one of the first splitterless DSL modems to market," said Jim Cady, vice president and general manager of Diamond Multimedia's Communications Division.

"We plan to continue working closely with Nortel Networks to launch our new SupraSonic DSL 1-Meg Modem and other DSL-based products into the retail market. With the expansion of our DSL product line and Nortel Networks' easy-to-deploy splitterless technology, we expect the rate of DSL service deployment to accelerate."

"Diamond Multimedia has established a reputation for bringing advanced technology modem products to the consumer marketplace," said Stephen Edwards, vice president, Nortel Networks Data Access Solutions. "The new SupraSonic DSL modem is a great addition to our 1-Meg Modem customer premise equipment portfolio and expands the line of high-quality DSL products that we can offer to our customers."

High-Speed Internet Access

Featuring download speeds of up to 960 Kbps and upload speeds of 120 Kbps, the Diamond SupraSonic DSL 1-Meg Modem delivers Internet connections that are up to 17 times faster than a 56Kbps modem. The new SupraSonic DSL 1-Meg Modem is an internal PCI-based solution that combines the functionality of a modem and an ethernet card to provide fast Internet access for downloading large files and viewing graphic-intensive web pages.

By providing simultaneous phone and Internet service through a single existing phoneline, the SupraSonic DSL 1-Meg Modem solution can help users avoid the expense of a second line for a dial-up modem. Additionally, the SupraSonic DSL 1-Meg Modem operates in an "always connected" mode that eliminates the time-consuming dial-ups, log-ins and busy signals typically associated with accessing the Internet.

Faster Internet Connections for Home Networking

DSL technology can greatly enhance the home networking experience by providing high-bandwidth access to the Internet. With the recent introduction of Diamond's HomeFree brand of home networking products, the high-speed bandwidth provided by the new SupraSonic DSL 1-Meg Modem can now be shared among multiple PCs within the home.

Diamond's HomeFree product line includes both a wireless networking solution and the recently announced phoneline networking solution based on the Home Phoneline Networking Alliance (HomePNA) standard. Diamond Multimedia's HomeFree products can be purchased at major computer retailers nationwide including CompUSA, Best Buy and Circuit City. Diamond's HomeFree Phoneline product is also available in Compaq's "Built for You" kiosk program located in more than 7,500 retail stores nationwide.

Ease of Operation and Installation

The Diamond SupraSonic DSL 1-Meg Modem operates over standard telephone lines and does not require any rewiring in the home or service visits. The new SupraSonic DSL modem provides fast, reliable connections by spanning distances up to 18,000 feet between homes and the telephone company's central office locations. Additionally, the SupraSonic DSL works with existing central office switches, providing fast and easy integration into existing networks.

System and Service Requirements

System requirements for the Diamond SupraSonic DSL 1-Meg Modem include an IBM compatible PC (Pentium 90 or higher) operating with Windows 95, Windows 98 or Windows NT and one free PCI slot. Service requirements include Nortel Network's 1-Meg Modem DSL phone service from a local telephone service provider and an Internet service provider.

About Nortel Networks

Nortel Networks delivers value to customers around the world through Unified Networks solutions, spanning mission-critical telephony and IP-optimized networks. Customers include public and private enterprises and institutions; Internet service providers; local, long-distance, cellular and PCS communications companies, cable television carriers, and utilities.

Nortel Networks' common shares are listed on the New York, Toronto, Montreal, Vancouver, and London stock exchanges. Nortel Networks had 1998 revenues of US$17.6 billion and has approximately 75,000 employees worldwide.

About Diamond Multimedia

Diamond Multimedia is a leader in PC multimedia and Internet connectivity, providing advanced products that enable desktop computer users to create, access and experience compelling new media content from their PC's and through the Internet.

Products include the Rio series of Internet audio appliances; the Stealth and Viper(R) series of video accelerators; the Monster series of 3D gaming accelerators; the Fire series of professional graphics accelerators; the Supra(R) series of modems; and the HomeFree line of home networking products.

Diamond's common stock is traded on the Nasdaq Stock Market under the symbol DIMD, and its web site address is http://www.diamondmm.com. The Company's Internet music portal site is at http://www.RioPort.com.

How to Contact Diamond Multimedia

There are many ways to reach Diamond for sales support, technical assistance, driver updates and general information: Internet Web Site: http://www.diamondmm.com Diamond Multimedia's Headquarters and Multimedia Division: 408-325-7000; Fax: [phone] Communications Division (Supra brand modems) Main Phone Number: 360-604-1400; Fax: [phone] European Division (Germany): [phone]; (UK): [phone]; (France) [phone] Korean Office (Seoul): [phone]; Fax: [phone] Japanese Office (Tokyo): [phone]; Fax: [phone] ASEAN Office (Singapore): [phone]; Fax: [phone] Hong Kong Office: [phone]; Fax: [phone] Australian Office (Sydney): [phone]; Fax [phone] Swedish Office: [phone]; Fax [phone] Latin America Office (Miami): 305-593-8777; Fax: [phone] Mexico Office (Guadalajara):523-110-1144; Fax: [phone] Product Support (Voice), United States: 541-967-2450; Europe

(Germany) [phone]; Europe (UK) [phone]; Europe

(France) [phone]; TDD/TTY Support 541-967-2451 Product Support (Fax), United States: 541-967-2401; Europe (Germany)

[phone]; Europe (UK): [phone]; (France)

[phone] Pre-sales Information: 1-800-468-5846 24-Hour Fax-On-Demand Service: 1-800-380-0030 Investor Relations: 408-325-7476; 1-888-474-3463 (U.S. and Canada) FTP site: ftp.diamondmm.com BBS: Europe (Germany) BBS at [phone] (to 28.8 Kbps) or

[phone] (ISDN); Europe (UK) at [phone] (to 33.6 Kbps)

Note to Editors: HomeFree, Monster 3D, Rio, Shotgun, SpeedStar and SupraSonic are either trademarks or registered trademarks of Diamond Multimedia Systems, Inc. Monster(r) is a registered trademark of Monster Cable. Viper(r) is a registered trademark of Directed Electronics, Inc., Used under License. All other trademarks referenced are the service mark, trademark or registered trademark of their respective manufacturers. This announcement relates to products whose introductions are in North America. The product name, contents, prices and availability may differ elsewhere in the world according to local factors and requirements.

Except for historical information contained herein, the matters set forth in this press release, such as statements relating to the Company's ability to successfully exploit technological and market developments, the timing and success of new product introductions by the Company and its competitors, and the Company's ability to invest in new technologies and to enhance its existing systems are forward-looking statements that are subject to risks and uncertainties, including the impact of competitive products and pricing and alternative technological advances, the timely and successful development and market acceptance of new products and upgrades to existing products, and other risks as detailed from time to time in Diamond Multimedia's SEC filings, including its most recent Forms 10-K and 10-Q.