Diamond Multimedia Ships Industry's First Widely Available Portable Internet Music Player, the Rio PMP300.

SAN JOSE, Calif.--(BUSINESS WIRE)--Nov. 23, 1998--

Rio PMP300 Available for Purchase Through E-Commerce Sites and

Major Computer Retail Outlets In-Time for Holiday Shopping Season

Diamond Multimedia Systems Inc. (Nasdaq:DIMD), a leader in interactive multimedia and PC entertainment, today announced that it has commenced shipment of its highly anticipated Rio PMP300 portable digital music player to North American customers.

International shipments will follow within the next few weeks.

Diamond Multimedia's Rio PMP300 will be available through numerous e-commerce sites and on-the-shelf at major retailers in time for the Thanksgiving holiday shopping weekend for an Estimated Retail Price (ERP) of $199.95.

E-Commerce sites that will carry, or plan to carry, the Rio MP3 portable music player include Barnes and Noble College Bookstores, CompUSA Direct, Compu-Plus, Cyberian Outpost, GoodNoise.com, IQVC, Microwarehouse, MP3.com, MusicMatch.com, NECX and PC Connection. Major retailers stocking, or planning to stock, the Rio PMP300 include Babbages, Best Buy (the largest distributor of music CDs), as well as Circuit City, Electronics Boutique, Fry's Electronics, J&R Computerworld and Nobody Beats the Wiz.

The Rio PMP300 is also available directly through Diamond Multimedia's online store at www.diamondmm.com/where-to-buy/online-store.

"As the nation's leader in digital technology products, Best Buy is excited to be the first retailer to offer Diamond Multimedia's Rio portable music player," said Robert Gunderson, Best Buy merchandise manager. "Digital distribution of music via the Internet is here and we intend to be a strong player in both the traditional sale of music, as well as sale over the Internet. The Rio PMP300 is the first of its kind and will be available in Best Buy's 312 stores across the country."

"We are pleased with the number of retailers who are carrying Rio and we expect to broaden our distribution during the first quarter of 1999, after the company fills its current backlog and further ramps production. We believe Rio will be a top-selling product for the holidays and into 1999," said Roland Rice, vice president of North American sales at Diamond Multimedia.

Explosive Internet Growth

According to Market Tracking International (MTI), "Music sales will be fueled by a twentyfold increase in Internet-related sales over the next two years as consumers find it easier to order and download music online."

Louis and Harris Associates further states that more than 40 percent of adult computer owners plan to shop online this year for holiday gifts, up 330 percent from 1997. Leading the plan-to-buy purchases are music and books at 46 percent each, followed by clothing and software.

Diamond Multimedia's Rio PMP300

The Rio PMP300 is a portable, lightweight digital music player for mixing and storing up to sixty minutes of digital quality music and up to eight hours of voice quality audio downloaded from the Internet to a PC. The device currently supports MP3 and features a simple interface for easily transferring files to Rio from the PC.

The Rio PMP300 is smaller than an audio cassette and has no moving parts so it won't skip, even during extreme movement. It is powered by a single AA alkaline battery for up to 12 hours of continuous playback. 32 MB of onboard flash memory provides up to 60 minutes of continuous digital quality playback and up to eight hours of voice quality audio.

An add-on flash memory upgrade card is also available in a half-hour (16MB) configuration for $49.95 (ERP) and a one-hour configuration (32MB) will be available in February for an ERP of $99.95 through Diamond Multimedia's online store at www.diamondmm.com/onlinestore.

Diamond Multimedia has incorporated Serial Copyright Management System (SCMS) into the Rio PMP300 to address concerns of the Recording Industry Association of America (RIAA) over copyright protection.

"Even though the Rio offers the functional equivalent of SCMS because it has no digital output, we incorporated a more formal implementation of SCMS copyright protection that prevents a second-generation copy of a digital audio recording from being made," said Ken Wirt, vice president of corporate marketing at Diamond Multimedia.

The Rio PMP300 ships with an installer CD featuring MusicMatch Jukebox software for making MP3 tracks (limited edition), an MP3 music sampler CD, high-quality portable stereo headphones, a cable for connecting Rio to the PC, a pass-through parallel port connector and a 1.5V AA alkaline battery.

About Diamond Multimedia

Diamond Multimedia is driving the interactive multimedia market by providing advanced solutions for home, business and professional desktop computer users, enabling them to create, access and experience compelling new media content from their desktops and through the Internet. Diamond accelerates multimedia from the Internet to the user with products that include the Stealth and Viper(R) series of media accelerators, the Monster series of entertainment 3D and sound accelerators, the Fire series of professional 3D accelerators, the Micronics series of system boards, 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 www.diamondmm.com.

How to Contact Diamond Multimedia

There are many ways to reach Diamond for sales support, technical assistance, driver updates and general information: -0-

Internet Web Site: http://www.diamondmm.com
Diamond Multimedia's Headquarters and Multimedia Division:
 408-325-7000; Fax: [phone]
Systems Business Unit (Micronics brand system boards) Main Phone
 Number: 510-651-2300
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]
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: 541-967-2444 (to 33.6 Kbps); Europe (Germany) BBS at
 [phone] (to 28.8 Kbps) or [phone] (ISDN); Europe
 (UK) at [phone] (to 33.6 Kbps)

-0-

Note to Editors: Monster 3D, Supra and HomeFree 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.