press release

Consumer Electronics Show (CES), Las Vegas, January 8, 2002 -- Maxtor Corporation (NYSE:MXO), the world's largest supplier of hard disk drives, and PortalPlayer, Inc., the industry's only supplier of digital audio platforms for consumer electronics, today announced a strategic relationship to accelerate the development of audio products for the consumer market. The two companies will jointly develop and market reference designs for consumer electronics systems using Maxtor QuickView™ high-capacity hard drives and PortalPlayer digital media technologies.

Maxtor and PortalPlayer will demonstrate their initial reference design in the Maxtor booth at the Consumer Electronics Show in Las Vegas, January 8 - 12, 2002 (Meeting Room N-228, Las Vegas Convention Center).

The Maxtor/PortalPlayer solutions will help original equipment manufacturers (OEMs) and original design manufacturers (ODMs) shorten time-to-market of their audio entertainment products, while meeting consumer requirements for reliability and usability. The designs will integrate technologies that improve system acoustics and performance, as well as support content protection and digital rights management.

The market for personalized digital audio is expanding from portable solid-state MP3 players to encompass a wider range of mobile and in-home products enabled by hard drive storage. Revenues from one of these emerging market segments, digital audio jukeboxes with built-in file management and storage, is projected to rise from $38 million in 2001 to $784 million in 2005 according to Cahner's In-Stat/MDR.

"We welcome PortalPlayer to the Maxtor A/V Solutions Alliance, an alliance of enablers which help CE manufacturers come to market rapidly with next-generation digital products," said Tex Schenkkan, senior vice president, consumer electronics and business development at Maxtor. "Together with PortalPlayer we will help OEMs reduce design time and associated costs by providing solutions that are flexible, modular and easy to integrate."

PortalPlayer technologies include a system-on-chip integrated circuit (IC), customizable firmware, host-based digital media manager, and integrated third-party services --- all the essential components of playback-only and record-capable digital audio players. Manufacturers using the Maxtor/PortalPlayer platform will be able to quickly implement hard drive-equipped products, such as digital jukeboxes and mini-component and home stereo systems.

"Maxtor is the world leader in digital storage," said Michael Maia, vice president of marketing for PortalPlayer, Inc. "By collaborating to implement system prototypes in key CE product categories, we reinforce our commitment to OEM and ODM customers to deliver state-of-the-art platforms that accelerate their time to market."

Maxtor QuickView is a digital recording, storage and playback technology that features rapid access to content without using tape or optical discs. No rewinding or fast forwarding is required, as both recording and playback functions are direct access and instantaneous. Maxtor QuickView hard drives include Maxtor's Quiet Drive™ technology, a series of innovative acoustical advancements and unique drive features that reduce hard drive noise levels and enhance end-user satisfaction.

The Maxtor A/V Solutions Alliance establishes relationships with industry-leading companies to address the growing demands of consumer electronics companies utilizing hard drive-based recording and storage technologies. The Alliance is a one-stop industry resource for A/V hardware, software, development, integration and testing services.

About Maxtor Consumer Electronics Business

Maxtor's Consumer Electronics Business (CEB) provides products and services to the consumer retail and CE-OEM markets. Retail products include FireWire and USB external Personal Storage solutions for Mac and PC users, as well as internal hard drive kits and interface accessories. For CE-OEMs, Maxtor offers its specially-designed QuickView hard drives which enable viewers to record, store and playback digital audio and video on Personal Video Recorders (PVRs), set-top boxes, game consoles and broadband appliances. Maxtor QuickView -equipped PVRs are available in thousands of locations worldwide from a variety of familiar consumer electronics manufacturers and service providers, including BSkyB, DirecTV, Echostar, TiVo, ReplayTV, JVC, Panasonic, Philips, Sony and Thomson. In addition to these products, Maxtor CEB provides design, development and manufacturing services worldwide to CE-OEMs to facilitate the creation of new consumer products enabled by Maxtor hard drives.

About Maxtor Corporation

Maxtor Corporation ( www.maxtor.com ) is one of the world's leading suppliers of information storage solutions. The company has an expansive line of storage products for desktop computers, network storage, high-performance Intel-based servers, and consumer electronics. Maxtor has a reputation of being a proven market leader, providing consistent high-quality products and service and support for its customers. Maxtor and its products can be found at www.maxtor.com or by calling toll-free (800) 2-MAXTOR. Maxtor is traded on the NYSE under the MXO symbol (MXO).

About PortalPlayer, Inc.

PortalPlayer, Inc. supplies consumer electronics manufacturers with complete platform solutions for open and secure delivery and management of digital media via the Internet. The company develops and markets advanced systems for digital audio recording and playback, using MP3 and other popular digital compression technologies. Founded in May 1999, PortalPlayer is headquartered in Santa Clara, California, with major offices in Seattle, Washington; Charlotte, North Carolina; and Hyderabad, India. The company has grown to more than 200 employees worldwide and has received three rounds of venture capital funding. Top tier investors include J.P. Morgan Partners, CIBC World Markets Corp., LSI Logic Corp., Techfund, and Vulcan Ventures, Inc.

Note: Maxtor and the Maxtor logo are registered trademarks of Maxtor Corporation. PortalPlayer, the PortalPlayer logo are trademarks of PortalPlayer, Inc. All other trademarks or registered trademarks are the property of their respective owners.

This announcement relating to Maxtor may contain forward-looking statements concerning future technology, products incorporating that technology, and Maxtor's execution. These statements are based on current expectations and are subject to risks and uncertainties which could materially affect the company's results, including, but not limited to, market demand for hard disk drives, the company's ability to execute future production ramps and utilize manufacturing assets efficiently, pricing, competition, and the significant uncertainty of market acceptance of new products. These and other risk factors are contained in documents that the company files with the SEC, including the Form 10-K for fiscal 2000 and its recent 10-Qs.