Diamond Multimedia Plans Future of Rio MP3 Player

Computergram International, July 7, 1999

Following the news that it has agreed to be acquired by graphics chip maker S3 Inc, Diamond Multimedia Systems Inc launched a new version of its Rio MP3 player at the end of last month, and promised that future versions of the portable music player would also play files encoded using Microsoft Corp's Windows Media Audio format. The S3 acquisition could speed up the spin-off of the company's RioPort division as a separate unit, the company said.

The new PMP 500 Rio comes with 64Mb memory and space for a 32Mb card, enabling around 2 hours of "CD-quality" music to be downloaded from the internet. Support for Windows Media Audio would both increase the quality and reduce the amount of memory required to store music, the company said.

As part of the announcements, Diamond announced partnerships with InterTrust Technologies Corp and Reciprocal Inc for digital rights management software, and with content provider Audible Inc for downloading spoken material, such as news reports and audio books, from the internet. The new PMP 500 supports Audible's encoding format. Diamond also struck up a volume manufacturing deal with the Taiwanese firm GVC Corp, which will mass produce the Rio. RioPort will then license the systems to other companies.

The music industry has opposed the introduction of MP3 players from Diamond and other companies, claiming they make it too easy to breach the copyright laws. But Diamond won a federal appeals court judgment last month, when it was ruled that Rio sales could continue as it was not a recording device. Deals with firms such as Reciprocal and InterTrust might help Diamond's case in future battles.