I guess you haven't actually used it. Air Play and Air DAC can co-exist and they serve different purposes. Take a look at this low cost but super high-end setup in the top 2 floors of a new Sheraton Hotel in Shanghai:
https://picasaweb.google.com/nuforcephoto/SheratonShanghaiHongkou
Airplay is used to control background music throughout the entire 2 floors. Air DAC is used for high quality streaming within a localized configuration. The owner just need to pass an iTX to his guests to play music from their own iPhone/iPad without dealing with any configuration.
I will only go into why you would want to use Air DAC.
1. Near audiophile level sound quality. It is possible for Air Play to sound good, provided that you send the optical output into a high-end DAC (such as our $1095 DAC-100) with re-clocking and buffer to remove jitters before doing high performance D to A conversion. For a < $200 solution, iTx and uTX with Air DAC is the best sounding streaming system out there in the sub $1000 price range. Take a look at the THD plot on our product page. uTX can be used any music player software.
2. Easy to use, no latency, no need for WiFi setup, no interference with existing WiFi. For music enthusiastic and audiophiles, this can be an important requirement in addition to sound quality. We want to be able to maintain good audio quality while someone at home could be maxing out the WiFi bandwidth watching videos or downloading large files. Air DAC with high quality analog output is easy to integrate into existing home audio system.
3. Easily stream music from one device to multiple receivers. For example, stream Pandora music from iPad to whole house audio.
4. Some household or business have mixed platform of Mac, Windows, iPhone and Android phones. A USB transmitter for Android phones will be available as soon as USB audio is widely supported.
There are other scenario where WiFi has to be used, such as the Shanghai Sheraton hotel owner's resident where they want to be able to change the background music with their iPad anywhere they are on 38th and 39th floors. So they use iPad Remote to control the Mac (with iTune home sharing) on the server room. But if they or their guests want to stream music to local audio system (board room, kitchen, etc), they can just use iTX with Air DAC in the room, without having to remember where they are, look up a list (if you use multiple Airport Express for Airplay streaming) on the iPad. So in such a setup and considering the technical knowledge requirement of the guests, Air DAC is a much easier to use solution. Just pass the iTX to a guest's iPhone or iPad, plug and play.