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Diamond cuts Rio MP3 player prices

The company slashes prices on its Rio portable MP3 player, bringing the cost of the popular device to its lowest yet.

Diamond Multimedia has slashed prices on its Rio portable MP3 player, bringing the cost of the popular device to its lowest yet.

Diamond was the first company to market a portable MP3 (MPEG 1, Audio Layer 3) player in the United States.

The MP3 format has stirred controversy in the music and computer industries because it allows easy access to pirated music as well as legitimate titles. Consumers, on the other hand, have largely embraced MP3, lured by easy access to an almost limitless library of music.

In fact, the controversy has not affected the popularity of the device among consumers, according to analysts. Diamond has shipped about 200,000 units since November, according to Kevin Hause, an analyst with International Data Corporation, and upcoming MP3 players from consumer electronics companies such as Samsung are expected to further jump-start the market.

"It's a little bit early to tell, but clearly it's going to be a big market," Hause said. "Diamond is the biggest consumer brand--they very much have the momentum right now."

That momentum likely will be increased by this week's price cuts. The original Rio, which was introduced at $199, has been discounted to $169. In addition, Diamond is offering a $50 mail-in rebate through the month of June.

"This price change makes the Rio an even more compelling portable digital audio solution," said David Watkins, president of Diamond's Rio division, in a statement.

The Rio can store 60 minutes of music on 32MB of flash memory, which can be expanded with 16MB add-on memory cards. Diamond also has introduced the Rio Special Edition, for $249.95, with 64MB of memory. The Rio SE is only available for sale from Diamond's online store.

"One of the key limitations on the Rio classic is that it doesn't have a lot of storage capability," Hause said. "As other products that have been announced are brought to market, they will have more memory," he said, adding that in the six months since the Rio was introduced, memory prices have continued to drop.

Today, "you can put in a lot more memory for the same price point," he said.