It's not just supplying a digital signal to the DAC though - it's also supplying power via the USB port.  All I know is that if I have my iPhone 5S connected digitally to the amp, and have the iPhone volume at full power, the valves are driven into distortion.  If the iPhone is at ~ 75% the distortion is gone (audio is crystal clear).  The same thing happens with my PC.  Martins been working on a solution for the future which will eliminate this issue altogether, as well as providing the ability to have more output power, AND allowing to switch charging off (which will allow most smart phones to connect digitally).

Hmm. I wonder what's going on. Seems like a problem in the analogue domain to me; could the DAC's output to the amp be too high?  I'll follow up with Martin.
 
(The fact that power is supplied via USB should be irrelevant to the signal being sent, by the way.)

I'd suggest when you get the DAC you try it
 
It's the same as using the Windows volume control when connecting any DAC - you can set the line-out / default volume.  Normally it is set to 100%. At this output - and it's just an electrical signal after all - the valves are over-driven, and they distort. Cutting it back to around 75% eliminates the distortion.  it doesn't matter if it doesn't make sense to you.  Its how it actually works. Martin and I have discussed it a lot over the last 6 months.

It's important to differentiate digital data transfer (computer to DAC) from the analogue (DAC stage to amp stage, within the unit in this case). You're talking about the digital USB connection as if it were analogue (strength of electrical signal, volume, line out, etc). The aim of a digital connection is to get the exact data stored in the audio file to the DAC - a bit-perfect transfer. (It's worth taking the time to understand this concept.)
 
Assuming an uncorrupted digital signal, any distortion would have to be a problem in the analogue domain.
 
Such a problem might be worked around by resampling the digital signal to 75% of its original amplitude, but this would be an undesirable kludge resulting in a loss of fidelity inappropriate in the hi-fi world. It's effectively reducing 24 bit resolution to more like 16 bit (to say nothing of other problems).
 
Speaking of uncorrupted digital signals, have you made sure that EQ is off on your iPhone (and your computer for that matter)?

I'd suggest you take this to PM.  Sorry for seeming a little frustrated, but you're asking me questions like I'm a beginner with this. There are issues with this DAC/amp which I've outlined.  I've discussed them at length with the actual designer.  I have the DAC/amp - you don't.  There is distortion.  It is because the valves are being overdriven. And yes - the EQ is completely off - and yes, I do know what I am doing.  I have been doing this for a while. Do you want me to put you directly in touch with Martin?

Would you recommend using this with the Sennheiser HD650s or should I look for something more powerful?

It depends on your listening levels and also your actual source. Realistically, while it drive my HD600 to an acceptable level for me, I am a lower volume listener, and others who listen to very dynamic music, and at higher volume levels, will probably not be satisfied.  Depending on sensitivity, I think it would be safer to stick to headphones under 150 ohms.  martin is already working on updated prototypes which will eliminate the overdriving of the valves, change the position of the USB port, and enable a lot more power. 

my sources would be my fiio x1 and my laptop. I usually listen at about 40 on my X1.

I just tried the same with my X1 on vol 40 with the HD600 - you and I listen at about the same level.  I then tried with the X1 and HVA, and my answer would be - it depends on how you're going to use it. If you're using line-out to the amp, then it will distort (the issue with over-driving the valves). If you set the port to headphone out (75/100 volume) and the HVA, then it works really well. You'll probably need high gain set on the HVA. IMO it is a better signature than the X1 alone - but that will come down to preference.

Just to add my 2 cents worth: Turning the digital drive volume down to say 80% 'wastes' very little bit depth. To do the maths:  16 bit, i.e. CD quality = 65,546 volume steps. With the DAC set to 24 bit, which is what many people will use = 65,777,216 volume steps. If you 'waste' 20% due to having to set the source volume lower you're still getting 65,777,216 x 0.8 = 52 million amplitude steps which compared to CD = 65 thousand, the quality is massively superior. 802 times to be exact
 
Future DAC's can easily be set to play with 100% volume from the digital input- the voltage dividing resistors are already in place its just a simple case of changing two values.

Thanks Martin. I think we'll disagree on the quality argument.  I doubt most people would be able to discern the difference between 12-13 bit and 16 bit under normal playback conditions.  But its good news that you have the input issues under control for future designs.  You've create a wonderful sounding device.  I love using this one.

Hi Paul- Yes I agree the above figures are purely technical for comparison. The resulting sound quality is dependent on many other factors and is very subjective. Glad you're loving the amp! 

Yes @Valve Amp, as discussed my earlier statement that reducing the volume is "effectively reducing 24 bit resolution to more like 16 bit" is clearly wrong.
 
I'll be interested to hear what the community makes of the need to reduce the source volume when there are more DACs in the wild.

It's not reducing the resolution to 16 bit- see above calculations. Furthermore, the master DAC chip, SA9227 connects to the digital source at the full 24 bit or 32 bit resolution no matter where you set volume control on your PC or Mac. Even if you turn it down to 50% the DAC chip still processes the digital data at full bit depth. The variations in volume setting are sent in serial data to the PCM5102A slave chip and this is where the output volume is set at the analog level no loss of bit depth or resolution.

@Brooko Any updates on the specialized lightning cable?  Just got my DAC in for the amp and really eager to use with iPhone (Old DAC has really low output compared to this)

You can get one from here : http://penonaudio.com/L19-Lightning-to-Micro-USB

 Back in April in your comment below you talked about distortion using amp with a phone do you get that same distortion if using an Ipod touch for example or would i have to put ipod volume at 75%  not to get distortion .The solution you talk about since then has it been implemented if it is is there a version number i shoud be aware to get the latest version  .Thanks .                                                                                                                                                                                                                                                                                                                                                                                                           Brooko 4/4/16 at 3:45amIt's not just supplying a digital signal to the DAC though - it's also supplying power via the USB port.  All I know is that if I have my iPhone 5S connected digitally to the amp, and have the iPhone volume at full power, the valves are driven into distortion.  If the iPhone is at ~ 75% the distortion is gone (audio is crystal clear).  The same thing happens with my PC.  Martins been working on a solution for the future which will eliminate this issue altogether, as well as providing the ability to have more output power, AND allowing to switch charging off (which will allow most smart phones to connect digitally).

Hi Mike - depends on the output of the Touch - but with the model I have, I'd guess that you'd need to dial back a little (to around 75%).  It still sounds pretty darn good.

And Martin does have an updated model being worked on now.  It has the DAC USB connection port at the bottom, various tweaks and fixes (ie you can turn of charging so you don't draw current from your phone) + he does have a fix for the distortion issues.  I'll let you know if I hear more.

@Brooko any news on the updated model?

@harpo1 - not yet.  Martin is supposed to be getting me one sent down soon.  Its such a pretty unit - I'm looking forward to hearing it.