Diamond Multimedia to Enter Multimedia I/O Market; Diamond Forms New Multimedia I/O Division and Launches First SCSI Host Adapter Product.

SAN JOSE, Calif.--(BUSINESS WIRE)--Jan. 27, 1997--Diamond Multimedia Systems, Inc., (Nasdaq: DIMD), a leader in the Internet multimedia market, today announced a new business initiative to enter the multimedia I/O market, augmenting its PC audio/visual and desktop communications products lines.

As part of this new initiative, Diamond has formed the Multimedia I/O Division to develop, market and support a line of multimedia I/O products for the desktop PC, the first of which is a SCSI host adapter product, the FirePort 40, also announced today. The new Division, located at Diamond Multimedia's headquarter facilities in San Jose, Calif., is being co-managed by Jim Gifford, vice president of engineering, and Ken Comstock, director of marketing. Both individuals report directly to Bill Schroeder, president and CEO of Diamond Multimedia.

Diamond Multimedia's expertise is in developing, marketing and supporting worldwide products that accelerate desktop multimedia data in the PC environment. "SCSI is a perfect fit for Diamond's strategy and core competencies," said Bill Schroeder. "Additionally, entering the multimedia I/O market now allows us to develop an infrastructure to exploit emerging I/O standards such as Firewire (IEEE 1394), which we see as the consumer multimedia bus of the future."

Today's multi-tasking and virtual memory enabled operating systems, such as Windows 95 and NT 4.0, coupled with the new generation of multimedia applications, are driving the need for high-bandwidth PCs. "Users want fast access to desktop and Internet multimedia content such as video, audio, 3D graphics and MPEG-2. SCSI is today's logical choice for high-performance I/O, offering nearly three times the performance of an IDE bus interface," said Comstock.

"Also, there is a great cross-over between our target graphics/video and desktop communications customers with today's SCSI users, since both want the best multimedia performance possible in their desktop PCs. With Diamond Multimedia's respected brand name and extensive channel presence, our company can now make widely available a complete line of PC-based products that will accelerate multimedia from the Internet to the hard drive," added Comstock.

Diamond Multimedia is launching its multimedia I/O business initiative in partnership with Symbios Logic, Inc., one of the world leaders in SCSI technology and semiconductor manufacturing. "We are leveraging our core expertise in the PC multimedia space and in PC architecture with the long experience of Symbios Logic in SCSI," said Gifford.

"Further, we are focusing our efforts only on what we view as the SCSI growth markets driven by PC multimedia needs: Windows 95 and Windows NT 4.0 software combined with PCI Plug-and-Play hardware. We intend to be an important participant in these segments worldwide."

Additional details regarding Diamond Multimedia's first SCSI product offering, the FirePort 40, and its strategic alliance with Symbios Logic are contained in separate press releases issued by the Company today.

Diamond Multimedia

Diamond Multimedia is driving the Internet multimedia market by providing interactivity and connectivity 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. Products include the Stealth and Monster 3D series of media accelerators, the Fire series of professional 3D graphics and SCSI I/O data accelerators, and the Supra series of modems and ISDN adapters. Diamond also markets sound cards and multimedia and video phone upgrade kits.

Headquartered in San Jose, CA, Diamond has sales, marketing and technical support facilities in Vancouver (Wash.), Singapore, Hong Kong, Seoul, Tokyo, Starnberg (Germany), Paris and Winnersh (U.K.). Diamond's products are sold through local and international distributors as well as directly to major retailers, VARs and OEMs worldwide. Diamond's common stock is traded on the Nasdaq Stock Market under the symbol DIMD.

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 Visual Systems 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] Support Information Line for Communications: 1-800-774-4965 Product Support (Voice), Visual Systems: 408/325-7100; Communications: 541/967-2450; Europe (Germany) [phone]; Europe (UK) [phone]; ISDN Support Center 408-325-7110; Fire GL Support Center 408-325-7120 Product Support (Fax), Visual Systems: 408/325-7171; Communications: 541/967-2401; Europe (Germany) [phone]; Europe (UK): [phone]; (France) [phone] Pre-sales Information, Visual Systems: 1-800-468-5846; Communications: 1-800-727-8772 Investor Relations: 408/325-7476; Fax-On-Demand: 1-800-346-3329; International Fax-On-Demand: 201/433-1778 24-Hour Fax-On-Demand Service, Visual Systems: 1-800-380-0030; Communications: 541/967-0072 FTP sites: ftp.diamondmm.com; or Supra: ftp.supra.com BBS for Visual Systems 408-325-7080 (to 14.4 Kbps) or 408-325-7175 (to 28.8 Kbps) or 408/383-0551 (ISDN); Communications BBS: 541-967-2444; Europe (Germany) BBS at [phone] (to 28.8 Kbps) or [phone] (ISDN); Europe (UK) at [phone]-

Note to Editors: Monster 3D and Supra are either trademarks or registered trademarks of Diamond Multimedia Systems, Inc. All other trademarks referenced are the service mark, trademark or registered trademark of their respective manufacturers. This announcement relates to products whose launch are in the United States of America. The product names, 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.

CONTACT: Diamond Multimedia

Lorraine Jenkins, 408/325-7346

[e-mail]

or

Financial Relations Board

Lise Needham, 415/986-1591 (General Info)

Bonnie McBride, 415/986-1591 (Investors)