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The first Rio player was the subject of a lawsuit by the RIAA, who argued that, in the early days of P2P, it only encouraged and facilitated illegal file sharing. Its victory arguably made the iPod possible and the iPod has, in effect, now killed off Rio.

D&M Holdings will instead concentrate on its 'premium' AV business.

'The digital audio market is evolving in such a way that

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our competitive advantage will be to focus on creating premium home network products that are designed for compatibility with a variety of client devices and services,' said Vic Pacor, president.

The company will continue to offer full customer support and repair services.

Rio's assets will be sold to SigmaTel, a maker of portable music player integrated circuits for the likes of Samsung and Creative, and its Cambridge, UK based design team will join SigmaTel.

'By providing solutions that enable companies to develop devices with the longest battery life, smallest form factors and lowest system design costs, SigmaTel has built a customer list that includes some of the most popular makers of MP3 player devices around the world,' said SigmaTel's president and CEO, Ron Edgerton. 'With the Cambridge design team in place, we're taking the necessary steps to make sure we maintain our market leading position and competitive advantage across market segments.