S3 announced plans to purchase OneStep, which develops the software used to download, create, organize, and play MP3 digital music files. Diamond subsidiary RioPort--which is focused on the company's digital music player business, including manufacturing and marketing the Rio portable player and running the RioPort Web site dedicated to digital music--uses OneStep's software for its Rio Audio Manager.
The financial details of the acquisition were not disclosed.
The acquisition reflects the growing importance of the digital music market in the PC and music industries, where players ranging from record labels to consumer electronics manufacturers vie for a stake in the burgeoning market.
The near-limitless availability of digital music for download, as well as the revamped distribution channel which allows consumers to bypass traditional retailers and record labels, has spurred growing interest among consumers. It's also propelled software companies to develop applications to ease the process of downloading and storing the tunes.
Streaming media company Real Networks' Real Jukebox software competes with OneStep's application. Yesterday, Real announced Real Jukebox would be integrated into the upcoming digital music player from consumer electronics firm Philips.
"The purchase of OneStep clearly shows our intent to continue playing a leading role in the rapidly emerging Internet music market," said David Watkins, president of RioPort, in a statement. "This is a key step for RioPort and demonstrates S3's commitment to providing financial backing for RioPort while we spin out to be an independently managed company."
Rio Audio Manager software, using OneStep's application, allows Rio users to organize music on the PC or Rio portable music player, and it directs users to the RioPort Web site to manage the content, according to RioPort.
Diamond, which developed the Rio player before spinning off its digital music business into the RioPort subsidiary, announced the merger with S3 last month.