Ditech Networks To Begin Licensing Network-Proven Voice Quality Algorithms In Multiple Markets

First Market is Mobile Bluetooth Technologies; Partners with CSR

Mountain View, California, August 19, 2008 - Ditech Networks (NASDAQ: DITC), a leading provider of voice quality solutions to the world’s communications industry, today announced that it will begin licensing its network-proven voice quality algorithms in several markets, beginning first with mobile Bluetooth technologies. Ditech will offer its high-performance voice quality algorithms to global chipmakers and manufacturers of Bluetooth devices and applications, bringing to the market proven technology that is already deployed in mobile networks worldwide and used by millions of callers each day.

As part of this strategic initiative, Ditech Networks has teamed with CSR (LSE: CSR), the world’s leading provider of Bluetooth chipsets for mobile applications. Ditech will provide its Voice Quality Assurance (VQA) and Experience Intelligence (EXi) algorithms as part of CSR’s open eXtension Partner Program. VQA and EXi will provide cost-effective, feature-rich options for customers of CSR’s market-leading BlueCore Multimedia DSP platform, which supports Bluetooth headsets, handsets, automotive applications and PDAs.

“CSR is pleased to welcome Ditech as an eXtension Partner,” said Helen Barnes, Software Marketing Manager at CSR. “BlueCore Multimedia is the only IC that embeds a DSP to provide support for a wide range of third party software enhancements. Ditech’s voice quality algorithms are a great asset to the program.”

Ditech is implementing its algorithms first for Bluetooth headsets, which is one of the fastest-growing segments in the consumer mobile devices industry. CSR supplied its technologies to more than 80 percent of the Bluetooth headset market during 2007. The total Bluetooth headset market worldwide is expected to grow at a 29 percent compound annual growth rate during the next four years. Other voice quality algorithms have been implemented primarily on high-end Bluetooth headsets and have become a strong differentiator among consumers. That differentiation is expected to migrate down to lower-cost Bluetooth headsets, and is expected to increase the size of the potential market for voice quality technology.

“The Bluetooth headset market is a perfect fit for a company with a history of voice quality innovations,” said Dr. Jagdish Rebello, Director and Principal Analyst of wireless communications at iSuppli. “Millions of mobile phone users already benefit from Ditech Networks’ technology. The combination of Ditech Networks’ voice quality experience, and the experience of an established global company in Bluetooth Technology like CSR, should prove very attractive to headset and DSP designers.”

As part of Ditech’s continuing strategy to diversify its revenue across multiple markets, Ditech anticipates licensing its voice quality algorithms in multiple markets for use in other Bluetooth technologies, consumer devices, and for emerging telecommunications services.

“Ditech’s core technology can be utilized to solve voice quality problems both inside and outside of the network,” said Karl Brown, Vice President of Marketing at Ditech Networks. “The fast-growing Bluetooth headset market, along with the implementation of Bluetooth technologies in other consumer devices, is a natural extension of Ditech’s strong history of helping mobile callers hear, and be heard, clearly.”

Ditech’s DSP algorithms for Bluetooth headsets have been optimized to use minimal hardware resources and to be compliant with ITU (International Telecommunications Union) standards, which are widely implemented by the world’s mobile carriers. Ditech’s software library is designed to support the latest generation of CSR’s popular BlueCore Multimedia DSP platform, and will provide several core voice processing algorithms that were originally developed for mobile carriers around the world, and have been continuously upgraded and improved during more than 10 years of research and development.

About Ditech Networks

Ditech Networks is shaping the future of voice quality through continuous innovation and leadership for the world’s communications companies. Ditech’s voice quality solutions are deployed in wireless and wireline networks to optimize the call experience. By delivering consistent, dependable voice quality, Ditech’s products help global communications companies meet the multiple challenges of service differentiation, network expansion and call capacity. Ditech’s customers include Verizon, Sprint/Nextel, Orascom Telecom, AT&T, China Unicom, Global Crossing and West Corporation. Ditech Networks is headquartered in Mountain View, California. For more information, visit www.ditechnetworks.com.

Forward Looking Statement

This press release contains forward-looking statements regarding Ditech Networks’ expectations of the performance of its voice quality measurement and optimization technologies, the growth of the Bluetooth market, and its expectations regarding licensing its algorithms in other markets. Actual results could differ materially as a result of unanticipated factors and events, including:  the risk that Ditech Networks’ voice quality measurement and optimization technologies may exhibit unforeseen technical problems that will preclude its use in certain Bluetooth consumer devices, networks, and other applications, including CSR’s BlueCore Multimedia DSP platform; the risk that the benefits perceived by Ditech will not be the same as those perceived by potential customers; the risk that customer demand will not be as expected for the Bluetooth market; as well as those detailed in “Item 1A – Risk Factors” of Ditech Networks' Annual Report on Form 10-K for the fiscal year ended April 30, 2008 (filed July 10, 2008, with the Securities and Exchange Commission).