S3 and RioPort Drive Digital Audio Initiative Forward with Acquisition of OneStep.

SANTA CLARA, Calif.--(BUSINESS WIRE)--Aug. 10, 1999--

Software Developer Supplies Digital Audio Manager to RioPort

and for Diamond Multimedia Rio Players

Accelerating its entry into the Internet digital audio market, S3(R) Incorporated (Nasdaq:SIII) today announced that it has acquired OneStep, LLC, a software development company that supplies the Rio Audio Manager to RioPort.com, Inc., a wholly owned subsidiary of Diamond Multimedia Systems, Inc. (Nasdaq:DIMD), and for Diamond Multimedia's Rio players.

The acquisition of OneStep's software -- a key technology behind RioPort's agreement with MTV Networks Online and Diamond's Rio player contract with Compaq -- underscores S3 and RioPort's intent to be a significant player in the high-growth Internet audio and MP3 music markets.

"The purchase of OneStep clearly shows our intent to continue playing a leading role in the rapidly emerging Internet music market," said David Watkins, president of RioPort. "This is a key step for RioPort and demonstrates S3's commitment to providing financial backing for RioPort while we spin out to be an independently managed company."

"By providing a key element in RioPort's strategy, this acquisition puts S3 in a stronger position to enter new media markets upon completion of the Diamond Multimedia acquisition," stated Ken Potashner, president and CEO of S3 Incorporated.

About OneStep's RioPort Audio Manager Software

The Rio Audio Manager software is designed to allow audio enthusiasts to easily acquire, create, organize and playback their favorite music or spoken audio programming in one simple application. The Rio software is compatible with the Rio PMP300, Rio 500 and other RioPort compatible portable players and is an integral part of the RioPort digital audio platform, which is being developed to provide integrated components for delivering a seamless digital audio experience over the Internet to consumers worldwide.

The Rio Audio Manager will direct users to the content they are looking for with a direct link to the RioPort.com web portal and allow them to completely manage that acquired content (or tracks from their own audio CD collection) through their own personal audio manager. The new Rio Audio Manager software will include encoding capabilities, a media player, database manager and device download agent. The software will be PC compatible and MetaTrust ready, addressing the concerns of digital content owners.

About RioPort.com, Inc.

RioPort.com, Inc. intends to redefine digital audio by delivering an integrated platform for acquiring, managing and experiencing music and spoken audio programming from the Internet. RioPort will deliver an extensive selection of digital music and spoken audio programming through its RioPort.com digital audio gateway, full content management with Rio Audio Manager software and cutting-edge playback solutions with Rio brand players, which are licensed to third-party companies. Company headquarters are in San Jose, Calif., where its business development, engineering and marketing teams are located. RioPort's artist relations, content aggregation and online creative team is based in Los Angeles, and its portable player design team is based in Korea.

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 series of video accelerators, the Monster series of 3D gaming accelerators, the Fire series of professional graphics accelerators, the Supra series of modems, and the HomeFree line of home networking products. Diamond's common stock is traded on the Nasdaq National Market under the symbol DIMD, and its web site address is at www.diamondmm.com. The Company's Internet music portal site is at www.rioport.com and its e-commerce site is at www.estore.diamondmm.com.

About S3 Incorporated

With the worlds' largest installed base of graphics and video accelerators, S3 Incorporated has established itself as a market leader in technology excellence, core business strengths, strategic partnerships and worldwide reach. Building on these strengths, S3 is committed to delivering targeted products for the Personal Computer, Internet Appliance and Communications Technology Markets.

Except for historical information contained herein, the matters set forth in this press release, including statements as to S3's ability to enter new media markets and the development of RioPort.com's business, are forward-looking statements that are subject to risk and uncertainties, including the impact of competitive products and pricing and of alternative technological advances, the ability of S3 and Diamond to consummate their merger and to integrate their businesses in a timely and successful manner, the ability of Diamond to obtain external funding for RioPort.com, Inc. and to enable RioPort to commence independent operations in a timely and successful manner, market acceptance of S3's and RioPort's new products, and other risks detailed from time to time in S3's SEC reports, including its Quarterly Report on Form 10-Q for the quarter ended March 31, 1999, and Diamond's SEC reports, including its Quarterly Report on Form 10-Q for the quarter ended March 31, 1999. S3 is a registered trademark of S3 Incorporated. The S3 corporate logo is a trademark of S3 Incorporated. Other marks referenced herein are the property of their respective owners.