I see threads aplenty asking if it is worth it to get an external DAC instead of an internal sound card. I thought of this analogy a while back and in my opinion it explains the differences quite well. My hopes are that any people new to computer audio can check out this thread to help them figure things out a bit.
Think of an external DAC as an F1 race car. It offer superior performance, but its obviously not going to include an array of luxuries. If your buying an F1 race car, your buying it for its speed, not its leather seats or well spaced leg room.
A sound card on the other hand, can be viewed as a 2010 Honda Civic. Now, this honda civic has tons of features, more than you think you could ever use. Its got nice seats, a great radio system, lots of leg room, and a decent engine to boot.
But, if you sit an F1 race care driver into a Honda Civic, he's going to be complaining about the lack of performance. Sure, its got all these features, but to someone focused solely on vehicle performance, its just not going to cut it.
However, the majority of the world aren't F1 race car drivers, so they would be satisfied with the honda civic.
The F1 is an external DAC. The Civic is an internal sound card. They both do the same thing, drive you to point B from point A (or in the real world application of this hypothetical, convert digital signal to analogue sound waves), but they do so at different performance levels.
All the features of the Civic represent all of the software capabilities of the sound card, but to the F1 race care driver (audiophile) who's been racing F1 cars all his life (this is you, someone listening to $500+ speakers) the features don't really matter if the performance isn't there.
My last point is referring to the fact that the majority of the world doesn't listen to $500+ speakers, so an external DAC (F1 race car) isn't necessary. However, to someone who is listening to those kinds of speakers (someone who does drive F1 race cars), the external sound card (F1 race car) is going to make all the difference over an internal sound card (honda civic).
A sound card is used for the same essential function as an external DAC; converting digital signal (binary code, 0's and 1's - inaudible to the human ear) to analogue signal (sound waves audible to the human ear).
The sound card just has software features used for gaming purposes. The DAC chip in a sound card will usually be significantly inferior to that of an External DAC. When using $100 computer speakers, the DAC chip on a sound card will be sufficient because the speakers aren't good enough to take advantage of anything better.
However, when using mid-fi or high-fi speakers, and by that I mean most speakers over $300, the superior DAC chip in an external DAC will most certainly be of noticeable benefit.
You will lose out on the gaming features of a sound card, but if you are buying speakers that expensive, its usually ok to assume that you'll be using the speakers mostly for music anyways.
It might be worthwhile to mention that there are a number of components that are essential to making a quality DAC besides the chip itself. However, due to the intended audience of this post, thats not something I'd like to get into.
I posted this analogy in the context of someone who was putting together a hi-fi stereo system and was having troubles deciding whether he wanted an internal sound card or an external DAC. It applies just the same to headphones and the like.
Hope that helps!
