Diamond Multimedia Systems representatives said the company will form RioPort as an independent subsidiary, consisting of the popular Rio digital audio device line of business as well as RioPort.com, an MP3 content site for Rio users. At an event in Los Angeles Wednesday night, Diamond also unveiled the Rio PMP 500 audio player,whose 64 megabytes of memory can hold up to an hour of high-quality audio -- twice the previous version's capacity.
The new Rio, slated to be available in August, also includes anti-piracy software to prevent unauthorized distribution of audio content. Diamond has been working with InterTrust Technologies to incorporate copyright protection features into the Rio. The lack of copyright protection in the Rio and other MP3 digital audio players has been an issue of great concern to the Recording Industry Association of America, which filed an ultimately unsuccessful lawsuit last year attempting to prevent Diamond from selling the Rio.
The launch of the new Rio came one day after graphics-chip manufacturer S3 announced the acquisition of Diamond in a stock swap worth about $170 million.
According to Mark Hardie, a senior analyst at Forrester Research, the deal gives S3 a potentially market-leading position in new Internet-oriented consumer electronics.
"Diamond is in the position to steal market position from Sony after its 20 years of dominance with the Walkman," Hardie said. "It's a great asset for S3, and the cash that S3 has will give Diamond the ability to go forward and deliver new, functionally narrow products like the Rio."
S3 said it will keep the Diamond brand name as well as most of its sub-brands, including Rio,RioPort.com, and the HomeFree home networking name.