File transfer rates are also expected to be increased. Currently transferring an audio CD onto the Rio in MP3 format takes as much as an hour. "The Rio did great first time around, but it wasn't exactly user friendly and was painfully slow uploading files. Diamond will have worked on that," said a source.
Last week Diamond won its US federal appeal against the American music industry. The court ruled that the Rio does not violate federal anti-piracy laws and does not qualify as a recording device. As a result the latest version is not expected to include any of the copyright security features the music industry wants.
More than 250,000 Rios have been sold worldwide. The new device is expected to sell for about $240 (£146) sometime this summer.
Diamond UK would not comment on this story.