Kaleidescape Broadens Market Reach
with Next Generation Products

New Entry-Level Pricing, Music-Only Offering and Flexible Configuration Enables Dealers
to Tailor the Ultimate Entertainment Experience to Their Customers’ Needs

DENVER, CO, CEDIA EXPO - September 14, 2006 — Kaleidescape, Inc., the market leader in entertainment servers, today unveiled a new generation of products designed to enable many more families to experience Kaleidescape’s exciting new way to enjoy movies and music throughout the home. The new Kaleidescape line-up includes an entry-level Kaleidescape System priced 55% lower than the previous entry-level System, and, for the first-time, a music-only configuration. Kaleidescape is also introducing a flexible system configuration tool that dealers can use to design, price and order a Kaleidescape System to meet a customer’s specific personal home entertainment needs.

“Since the first Kaleidescape System was introduced in 2003, we have built a reputation for providing the most engaging and exciting entertainment experience for the home,” said Michael Malcolm, founder, chairman and CEO of Kaleidescape. “Our latest product introduction continues the tradition, providing new design and usability enhancements that deliver the reliability, performance and ease-of-use that our customers have come to expect. And, our new more affordable pricing will provide the opportunity for a large number of people to enjoy the Kaleidescape Experience in their home.”

Based on the proprietary Kaleidescape Entertainment Appliance Operating System (KEAOS), Kaleidescape products deliver capabilities for movies and music that are unmatched in the industry. The System provides a compelling and easy-to-use interface, and can handle collections of DVD movies and audio CDs of any size. It automatically organizes movie and music collections, protects them from loss and provides rich descriptive information for each DVD and CD. Different family members and guests can simultaneously enjoy the Kaleidescape Experience in different rooms.

Features and Benefits Provided By the Next Generation Products

New Entry-Level Pricing

• The starting price for the new Kaleidescape System is $9,995 (for U.S.A. and Canada) . (The previous entry-level Kaleidescape System – with substantially more storage – was priced at $22,000.) Customers can start with the entry-level System and configure a larger System that meets their specific needs by adding more storage capacity, more play-back zones, and additional software capabilities.

First-time Music-Only Offering

• The introduction of the new music-only System marks the first time that Kaleidescape has offered a music-only version of the System.
• Consumers today experience the same problems with music as they do with movies – finding, organizing, managing, protecting and storing their audio CDs.  And, many customers have more audio CDs than DVD movies in their homes.
• The new music-only System lets customers store, manage and play all of their music – at the highest fidelity – in any room in the home.
• Customers who purchase a music-only System can easily upgrade at any time to include movie capabilities.

Enhanced Music Features

• With the introduction of the next generation Kaleidescape products, Kaleidescape is also introducing KEAOS 3.2, which includes significant enhancements that make it even easier to enjoy music collections.
• New music features include the ability to play all of the music by a given artist or in a particular genre, and the ability to create Mix Albums (similar to permanent playlists) through the on-screen Kaleidescape Interface.
• KEAOS 3.2 has already been distributed (via the Internet) and automatically installed in existing Kaleidescape Systems.

Kaleidescape 1U Server

• The new 1U Server is capable of serving up to 25 simultaneous play-back zones of movies or music in the home, and is designed to store a total of up to 335 DVDs or 3,900 CDs, or any combination thereof. (Maximum storage capacity is 2.25 terabytes of data storage, plus RAID-K protection.) Multiple Servers can be clustered together for virtually unlimited capacity.

Kaleidescape Movie Player 2

• The new Movie Player 2 makes it possible for customers to easily replace their legacy DVD players and to import their movies and music from any location within the home, as each Movie Player 2 includes an integrated DVD/CD combo disc drive.
• Each Movie Player 2 supports direct-from-disc-playback just like a DVD player, so customers can play rented or borrowed DVDs, which cannot be imported into the System.

New Industrial Design

• The Kaleidescape 1U Server and Movie Player 2 are sleek in design and smaller in size, requiring less space in the home.
• Optional side bezels are available for products for free-standing installations. They can also be easily mounted in a standard rack.

Availability
The new Kaleidescape products, including the 1U Server and Movie Player 2, are currently shipping, and may be ordered through an authorized Kaleidescape dealer.

About Kaleidescape
The Kaleidescape System is redefining home entertainment by transforming the way movies and music are collected, managed and enjoyed throughout the home, yacht or private jet. The Kaleidescape System combines a compelling interface, outstanding industrial design, and services that set new standards in the consumer electronics industry. Kaleidescape was founded in 2001 and is privately held. The company is headquartered in Sunnyvale, California with research and development conducted by Kaleidescape Canada, Inc., based in Waterloo, Ontario. Kaleidescape products are available through a worldwide network of custom-installation dealers and distributors. For more information, contact Kaleidescape at (888) 352-5343 or (650) 625-6150, email us at sales@kaleidescape.com, or visit www.kaleidescape.com. Contact a local dealer for international pricing.

Kaleidescape and the Kaleidescape logo are trademarks of Kaleidescape, Inc.; they are registered in the United States and may be registered in some jurisdictions. Other trademarks and trade names are owned by third parties and may be registered in some jurisdictions.