DIAMOND MULTIMEDIA ANNOUNCES PLANS TO EXPAND ITS HOMEFREE BRAND OF HOME PC NETWORKING PRODUCTS WITH PHONELINE-BASED SOLUTION

VANCOUVER, Wash. - November 2, 1998 - Diamond Multimedia Systems, Inc. (Nasdaq: DIMD), a leader in interactive multimedia and PC entertainment, today announced plans to expand its HomeFree™ brand of home networking products with a phoneline-based solution. The new solution will utilize AMD's PCnet-Home, the first complete single-chip home networking controller, and is expected to ship in the first quarter of 1999. Phoneline networking technology enables consumers to link multiple PCs over standard telephone wiring. The decision to offer consumers a choice among HomeFree networking products - both wireless and wireline - underscores Diamond Multimedia's commitment to the home networking market. "The PCnet-Home controller from AMD offers a balanced combination of hardware and software functionality," said Jim Cady, vice president and general manager of Diamond Multimedia's Communications Division. "This single-chip controller provides the opportunity for us to add an affordable, phoneline-based solution to our HomeFree line of home networking products. We are extending our HomeFree product line beyond wireless technology so that consumers can select the home networking solution that best fits their needs." "Diamond Multimedia has demonstrated expertise in delivering high-performance consumer communications products," said Laila Razouk, vice president of AMD's network products division. "The PCnet-Home controller is an excellent foundation for Diamond Multimedia's upcoming phoneline-based product, and includes all of the hardware and software required to enable a cost-effective home networking solution based on the HomePNA technology specification."

The Home Networking Phenomenon
Access Media International (AMI-USA) states that home networking represents the next major inflexion point in consumer computing much the same way multimedia was five years ago. According to a recent Business Week article dated October 19th, money is the motivating factor that will prompt consumers to connect their home PCs and other information appliances. The article states, "With a home network, people with more than one PC won't need more than a single printer, modem or Internet connection. Instead, PCs and other gizmos will connect to each other over a network, sharing peripherals and a single Net account. That could save hundreds of dollars in a multi-PC home."

HomeFree Brand of Home Networking Products
Phoneline-based products run over existing in-home telephone wires and do not require any "new" cabling. The upcoming phoneline-based solution will be based upon the widely endorsed specification of the Home Phoneline Networking Alliance (HomePNA), which stems from Tut System's HomeRun technology. The product will be the newest addition to Diamond Multimedia's HomeFree brand of home networking products. Today in a separate press release, the company announced that it has begun shipments of the "HomeFree Wireless" product. This product is based on radio wave technology and does not require the use of any wires. Diamond Multimedia is a home networking provider that intends to offer consumers a choice among affordable, easy-to-use solutions based on multiple types of networking technologies. For online information about the HomeFree brand, consumers can visit http://www.diamondmm.com/homefree . Diamond Multimedia is a member of both the Home Radio Frequency Working Group (HRFWG) and the HomePNA.

About the Home Phoneline Networking Alliance
The Home Phoneline Networking Alliance is an incorporated, non-profit association of industry-leading companies working together to help ensure adoption of a single, unified phoneline networking industry standard and rapidly bring to market a range of interoperable home networking solutions.

About Diamond Multimedia
Diamond Multimedia is driving the interactive multimedia market by providing advanced solutions for home, business and professional desktop computer users, enabling them to create, access and experience compelling new media content from their desktops and through the Internet. Diamond accelerates multimedia from the Internet to the user with products that include the Stealth and ViperŽ series of media accelerators, the Monster series of entertainment 3D and sound accelerators, the Fire series of professional 3D accelerators, the Micronics series of system boards, the SupraŽ series of modems, and the HomeFree line of home networking products. Diamond's common stock is traded on the Nasdaq Stock Market under the symbol DIMD, and its web site address is www.diamondmm.com .

How to Contact Diamond Multimedia
There are many ways to reach Diamond for sales support, technical assistance, driver updates and general information:
Internet Web Site: http://www.diamondmm.com 
Diamond Multimedia's Headquarters and Multimedia Division: 408-325-7000; Fax: 408-325-7070
Systems Business Unit (Micronics brand system boards) Main Phone Number: 510-651-2300
Communications Division (Supra brand modems) Main Phone Number: 360-604-1400; Fax: 360-604-1401
European Division (Germany): +49-8151-266-0; (UK): +44-1189-444400; (France) +33-1-55381600
Korean Office (Seoul): +82-2-551-2700; Fax: +82-2-551-2710
Japanese Office (Tokyo): +81-3-5695-8401; Fax: +81-3-5695-8403
ASEAN Office (Singapore): +65-353-9511; Fax: +65-353-9510
Hong Kong Office: +852-2375-9023; Fax: +852-2375-9021
Australian Office (Sydney): +61-2-9460-2355; Fax +61-2-9460-2360
Swedish Office: +46-417-40060; Fax +46-417-40054

Product Support (Voice), United States: 541-967-2450; Europe (Germany) +49-8151-266-330; Europe (UK) +44-1189-444444; Europe (France) +33-1-55381616; TDD/TTY Support 541-967-2451

Product Support (Fax), United States: 541-967-2401; Europe (Germany) +49-8151-266-331; Europe (UK): +44-1189-444445; (France) +33-1-55381601 Pre-sales Information: 1-800-468-5846 24-Hour

Fax-On-Demand Service: 1-800-380-0030 Investor Relations: 408-325-7476; 1-888-474-3463 (U.S. and Canada)

FTP site: ftp.diamondmm.com
BBS: 541-967-2444 (to 33.6 Kbps); Europe (Germany) BBS at +49-8151-266333 (to 28.8 Kbps) or +49-8151-266334 (ISDN); Europe (UK) at +44-1189-444415 (to 33.6 Kbps)

Monster 3D, Supra and HomeFree are either trademarks or registered trademarks of Diamond Multimedia Systems, Inc. Monster* is a registered trademark of Monster Cable. Viper* is a registered trademark of Directed Electronics, Inc., Used under License. All other trademarks referenced are the service mark, trademark or registered trademark of their respective manufacturers. This announcement relates to products whose introductions are in North America. The product name, contents, prices and availability may differ elsewhere in the world according to local factors and requirements.

Except for historical information contained herein, the matters set forth in this press release, such as statements relating to the Company's ability to successfully exploit technological and market developments, the timing and success of new product introductions by the Company and its competitors, and the Company's ability to invest in new technologies and to enhance its existing systems are forward-looking statements that are subject to risks and uncertainties, including the impact of competitive products and pricing and alternative technological advances, the timely and successful development and market acceptance of new products and upgrades to existing products, and other risks as detailed from time to time in Diamond Multimedia's SEC filings, including its most recent Forms 10-K and 10-Q.