Will a DAC drastically improve Apple TV?

I just recently added an Apple TV to my system and a PS Audio Digital Link III with level IV Cullen mod both connected with an Audioquest Optilink 5 toslink cable. I have been really surprised with the sonic results. I would say the combination has been on par with the Ayre CX-7e CD player it replaced with maybe not quite as much bass articulation but definitely very detailed. Spatial resolution is also pretty darn close to the Ayre.

I will add though that I saved all my CD's as Apple Lossless files, not MP3 so I would be suspicious that part of the problem may be the compressed audio files you are using. It's been a while since I have listened to MP3 files in my system and I certainly wouldn't describe them as grossly distorted but they were lacking in ultimate sound quality. I would think also that even if you use MP3 files that a dedicated external D/A converter can only help matters as compared to the internal D/A's in the Apple devices, although I have not listened to the analog outputs of the Apple TV to compare.

I say give it a shot. Use the Apple TV with the analog outputs and if you are not crazy about the sound explore getting an external D/A converter. I don't think the Apple TV will be the weak link used as a digital transport.

If you are going to use an Apple TV you will probably want to get the 160 gb version. I have saved roughly 320 CD's in Apple Lossless and it has taken up apx. 95 gb. If you have wi-fi you may want to also consider using an iPod touch with the remote application. It allows you to navigate the apple tv without having to have a monitor or TV on. I love this feature

I once had a Bel Canto Dac1, and its sound was fantastic, far better than an Apple TV's analog outputs. I'd say that a Dac2 is a very safe bet to be noticeably better than no dac at all. It'll also hold its resale value.

FYI, the Bel Canto is a bit on the smooth side of things, which is usually a good fit with low-grade digital sources.

I have an Apple TV hooked into the digital inputs of my Krell S-1000. Overall, I have been very pleased with the sound. But, even at that, the sound quality of podcasts can vary greatly from podcast to podcast.

I do think you will get better results going digital. But you may still have anomalies occasionally.

I second the idea of getting the 160 GB version. I have the 40 GB version and it gets filled up awfully fast. Especially video. I find myself offloading most stuff to my HTPC.

For the level of gear you are using it is nuts that you are playing back compressed Mp3 files. You need to re-rip your collection to Apple Lossless with error correction turned on. This will make a bigger improvement than any gear you buy. After that, yeah a DAC makes it a lot better for sure and would be well worth it.

I have the 160 GB Apple TV. 400 CD's is about 120GB in Apple Lossless. I have a Naim Supernait which has a built in DAC. I am very pleased with this combination. The Apple TV combination also compares favourably with the Naim CD5x which in case you don't know is a $3400 CD player. So in summary the Apple TV works well as a media player. I just hope they make a version that has a bigger hard drive.