S3's Rio to Move Beyond Handhelds

BOSTON (05/03/2000) - S3 Inc., along with its subsidiary Diamond Multimedia Rio, is relaunching itself as a digital media company, with a long-term plan to expand the firm's technology far beyond the handheld player market. The move comes as technology continues to change the ways in which people listen to music.

Following S3's recent announcement that it will transfer its graphics chip business to a separate joint venture, the company is moving further into the consumer audio market with its Rio technology which will be used in music appliances bearing the Rio brand, S3 said in a statement issued today.

"Digital audio is gaining momentum like crazy," said Van Baker, vice president of consumer platform research for market research company Gartner Group Inc. in San Jose, California. "And it is changing the way entertainment content is distributed and consumed."

By digital audio, the Gartner Group analyst means distribution of content over a network such as the Internet.

S3 will license the Rio technology to other companies wishing to develop digital audio in order to reach the emerging market for digital audio. The firm will also allow a set of consumer companies to market digital audio devices in ways that will bring digital music to more people in different ways, according to S3.

Other initiatives include S3's Home and Car Audio program where the company will introduce consumers to other devices, other portable players, that play and manage digital audio files. S3 plans to make personal digital audio selections more portable and flexible with products like the Rio Receiver and the Rio Jukebox.

The Rio Receiver will use home networking software to distribute music throughout a user's home via his or her hard drives. The Rio Jukebox is a unit that offers a built-in CD drive and onboard music storage from where one can manage music.

For example, if a user owns 300 CDs, they will be able to download all that music into the Jukebox and dial up any song they want to listen, Mike Reed, director of marketing for S3's communication division, said in a phone interview today. A user can listen to their entire CD collection from one place without having to reload their CDs into the player, he added.

S3 also plans to offer a new range of digital audio players designed to meet the needs of different types of listeners. The company believes that people listen to music in different ways and are creating a family of portable digital audio players that will offer specific features, functions, designs and price points. The company did not disclose any more specific information on this strategy.

S3, in Santa Clara, California, can be reached at +1-408-588-8000 or on the Web at http://www.s3.com/.

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