Diamond and Aureal to Create New PCI Audio Cards

Diamond Multimedia Systems, Inc. (Nasdaq: DIMD), a leader in the interactive multimedia market, and Aureal Semiconductor Inc. (AURL: OTC Bulletin Board), a leading developer of advanced positional 3D audio technology, today announced a significant strategic alliance to co-develop and market next-generation PC audio solutions for the PC consumer and game markets.

Diamond will utilize Aureal's A3D/Vortex audio technology exclusively for products sold under Diamond's award-winning Monster Sound PCI audio accelerator brand. Diamond intends to begin shipments of its next generation Monster Sound solutions featuring Vortex with A3D technology to retail stores, OEMs, systems integrators and distributors in the near future.

"The combination of Diamond's reach into the worldwide retail and distribution channels and Aureal's consistent innovation in cutting-edge audio technology will result in tremendous value for consumers as well as contribute to the overall progress of PC audio," said Bill Schroeder, president and chief executive officer of Diamond Multimedia. "With a foundation already created by the growing popularity of our Monster Sound audio accelerators which feature Aureal's proprietary A3D for 3D audio, and the incorporation of Aureal's state-of-the-art Vortex audio processors in our next generation of Monster Sound products, Diamond and Aureal plan to propel the demand for positional 3D sound technology into a market that we expect to be as successful as 3D graphics is today."

Since the introduction of the first Monster Sound audio accelerator, featuring Aureal's A3D positional 3D audio technology, Diamond's Monster Sound brand has quickly become the audio accelerator solution of choice among dedicated PC gamers. To date, Diamond's Monster Sound products as well as Aureal's Vortex audio chip enabled sound cards featuring A3D, have received numerous awards from the industry's most influential PC, multimedia and gaming publications.

"The strategic alliance between Diamond and Aureal is a very exciting development for the PC audio market. Both companies are dedicated to providing consumers with audio solutions that deliver a more immersive, life-like experience, whether they're on the Internet, playing games or using the newest multimedia software. Now the two companies are combining forces in a close-knit strategic alliance that will focus and coordinate our respective strengths, aimed at driving our combined share of the audio gaming market to a very substantial level," said Kip Kokinakis, CEO of Aureal Semiconductor. "The success model we are using is to drive A3D to be to audio gaming what 3Dfx Interactive's Glide is to graphics gaming."

Aureal's A3D positional 3D audio technology has quickly received widespread support from the industry's leading game developers. In fact, A3D-designed audio effects have become an essential element for creating the hottest 3D-rich PC games on the market, including blockbuster games such as Unreal by Epic Megagames. A3D-designed PC games are currently available from an increasingly large list of game developers, including Activision®, Interplay®, LucasArts Entertainment®, Maxis® and Rage Software®.

"Our research shows that worldwide discrete sound board shipments increased from 17.4 million in 1996 to 20.8 million in 1997," said Sujata Ramnarayan, multimedia analyst at Dataquest. "With the game market pushing the envelope for new experiences, Dataquest believes that 3D audio will have a place in today's new technologies and tomorrow's gaming experience."