DAC upgrade or Amplifier

Phil - Each volume control technology has its deficiencies, so all of them are a compromise of some sort.  The best scenario is probably to do some reduction in volume using a DAC digital control, gain control and then additional drop using S/W volume control. You can do about 10dB with a good volume like Amarra has without any SQ impact.   If you can find a DAC with several gain settings, but no volume control, this is probably best.  Set it as a lower setting and then reduce more with S/W volume on a computer.

Like almost all design, its not so much the technology as the implementation that makes a good performing circuit.  If the digital volume control on the DAC is implemented well, you will get excellent results.

HAP-Z1es is correct.

Steve N.

Empirical Audio

Looking at the internal architecture, the Sony HAP-Z1ES is a significant/huge upgrade from your Cambridge DAC Magic.  However at $1259 used / $2k new, it uses up pretty much your entire upgrade budget.  It leaves nothing left (in your budget) for amplifier upgrade.  The assumption is that the Sony does use a digital volume (which means you can connect direct to an amp).  The digital volumes works by converting the 16/24 bit audio data to 32 bit and then reduce the bit height of the waveform before it hits the DAC chip.  There is controversy on whether a true analog preamp is better than this or not.  Personally, I think I would rather have full bit resolution at the DAC/output stages and run it through a true analog resistor-ladder volume control.  A high end passive preamp could be a solution (like the Khozmo or even some others that have a capacitor/transformer output), but passives do have their own challenges as well.

I have not heard any preamp less than about $10K that can do a decent job.

Steve's quote may be absolutely true from his point of view, but I caution the need to spend $10K plus on a preamp because everything is relative.  You can definitely get a better preamp with more transparency/resolution, but everything is relative to what you can actually work with (both budget and practicality).

Auxinput is correct, my relative comparison is at a highly rarified level.  I can easily hear the difference between and AIFF file and a wav file in my system.

It's the active preamp that is the bain of most audio systems.  Get rid of it or replace with transformer-passive linestage is my recommendation.

The Sony can be bought used on Audiogon for about $1K.  Make them offers.  This will be such a massive upgrade to what you have now that you will not believe your ears.  IF you have decent speakers, it will sound wonderful.  Upgrade your amps later after you save up.  Get some good used amps, even tubes if your speakers are efficient enough.  An old Scott amp with EL-84 tubes will sound amazing.  If you want to stay with SS, then try some digital amps, like Nuforce, Merrill or cherryamp.com.  Try to get used on audiogon first.

Steve N.

Empirical Audio