Diamond Multimedia Systems to Showcase Hot New Consumer Products at the International Consumer Electronics Show.

SAN JOSE, Calif.--(BUSINESS WIRE)--Jan. 4, 1999--

Diamond to Demonstrate Red-Hot Rio Digital Music Player,

Monster Sound 3D Gaming and HomeFree Wireless Networking 

Diamond Multimedia Systems Inc. (Nasdaq:DIMD), a leader in interactive multimedia and PC entertainment, this week will display three of the company's hottest new consumer solutions for Internet audio, 3D audio entertainment and home networking at the 1999 International Consumer Electronics Show (CES), the premier trade event for emerging consumer technology.

At Diamond Multimedia's booth, No. 4124 in the North Hall of the Las Vegas Convention Center, domestic and international attendees can see first-hand the Rio PMP300, a cutting-edge portable digital music player that supports the popular Internet music format, MP3; the new high-performance Monster Sound MX300 that offers advanced support for interactive positional 3D sound and Dolby Digital for DVD titles; and the plug-and-play HomeFree Wireless home networking solution that allows consumers to easily network PCs and peripherals.

"The Rio and HomeFree Wireless products represent Diamond's first mainstream proprietary entrants into the PC consumer home market," said Ken Wirt, vice president of corporate marketing at Diamond Multimedia. "With more than 20 million homes equipped with multiple PCs and 60 million homes connected to the Internet, HomeFree and Rio provide high-quality innovative solutions that offer versatility, convenience and advanced functionality to the home consumer.

"And for the PC gaming enthusiast who demands a sound card with the latest advancements, the award-winning Monster Sound MX300 provides the ideal 3D audio entertainment solution with full positional sound."

MP3 Audio Is Now Portable

Rio PMP300 -- Diamond Multimedia's new Rio is the first affordable portable music player that lets people download and listen to audio from the Internet or from their own music CD collection. Based on MP3, the most popular Internet audio compression format, users can download, store and playback digital-quality music, audio books, news broadcasts and more.

Rio features 32MB of onboard flash memory for up to 60 minutes of continuous playback of music or eight hours of voice-based audio. Since it's a solid-state device with no moving parts, Rio doesn't skip or stop when subjected to heavy physical activity. Better yet, Rio has a sleek, compact design (about the size of a deck of playing cards, weighing just 2.4 oz.) and includes comfortable headphones.

Diamond Multimedia's Rio is now available through select retail stores and online retailers and at Diamond's On-Line Store for a U.S. estimated retail price (ERP) of $199.95. Additional flash memory upgrades are available for $49.95 U.S. ERP (up to 30 minutes) and $89.95 U.S. ERP (up to 60 minutes) from Diamond's online store at http://www.diamondmm.com/where-to-buy/online-store.

For details on Diamond's hottest new product, go to http://www.diamondmm.com/products/current/rio.cfm.

New Positional 3D Sound Card

Monster Sound MX300 -- A must-have peripheral for discriminating PC gamers, Diamond's Monster Sound MX300 audio accelerator, featuring Aureal Semiconductor's Vortex(tm) 2/A3D 2.0 positional 3D audio processor, is designed for PC games embedded with rich 3D audio environments.

Engineered to accelerate software developed for Aureal's A3D and Microsoft's DirectX 5/6 APIs, Diamond's new sound card supports up to 96 simultaneous DirectSound audio streams and as many as 16 positional 3D audio streams for awesome 3D audio playback performance. Better yet, the Monster Sound MX300 delivers Dolby Digital (AC-3) support, soft-DVD acceleration, MP3 utilities, professional-quality 320-voice DLS-compatible wavetable synthesis and SoundBlaster(R) Pro compatibility in Real Mode DOS.

In addition to audio playback through two or four speakers and headphones, Diamond's own Monster Sound MX-LINK option allows PC consumers to upgrade and install additional speakers for a true 5.1 channel (six speaker) home theater experience, as well as digital input and output, such as S/PDIF to the base product. Diamond's Monster Sound MX300, including popular 3D games and audio utilities is available at U.S. retail stores for a U.S. ERP of $99.95.

Complete details on Diamond's newest Monster Sound audio accelerator are available online at http://www.diamondmm.com/products/current/mx300.cfm.

Network Home Computers Without Drills and Messy Cable Wires

HomeFree Wireless -- With Diamond's HomeFree Wireless networking solution, consumers can easily share simultaneous Internet access, printers and modems, and engage in networked multi-player games -- all for less than $100 per desktop computer.

Perfect for home environments, the HomeFree Wireless solution features radio wave technology that works through most floors, walls or ceilings so that consumers can avoid the hassles of drilling through walls or dealing with messy wire connections. Diamond's HomeFree Wireless networking solution operates at 2.4 Ghz for high-bandwidth transmission speeds of up to 1 Mbps and features a range of up to 150 feet.

Diamond's HomeFree Wireless networking solution is available in two versions for Microsoft's Window 95/98 operating systems. The Desktop Pac includes one ISA card and one PCI card (one for each of the two desktop computers to be connected) and is priced at a U.S. ERP of $199.95. A second solution, the Combo Pac, features one PCMCIA card and one ISA card to connect a laptop and desktop computer together and carries an ERP of $229.95.

For users who want to network more than two computers, additional single-node cards can be purchased directly from Diamond's online store at http://www.diamondmm.com/where-to-buy/online-store/ for $99.95 per node for the ISA card or the PCI card and $129.95 for the PCMCIA card. Further details on Diamond's new home wireless network solution are available online at http://www.diamondmm.com/homefree/.

About Diamond Multimedia

Diamond Multimedia is the leader in multimedia solutions and emerging technologies for the home and business markets, 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, Viper(R) and SpeedStar series of video accelerators; the Monster series of 3D gaming accelerators; the Fire series of professional graphics 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:

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] 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: 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)

Rio, Stealth, Viper, SpeedStar, Monster 3D, Micronics, Supra and HomeFree are either trademarks or registered trademarks of Diamond Multimedia Systems, Inc. Monster is a registered trademark of Monster Cable. Viper 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.