I think this post by Jason Stoddard(of Schiit Audio) is the perfect counter arguement. However we must note that jason posted this story section before keith's post.
I have truncated his post due to length, you can read his full post here: http://www.head-fi.org/t/701900/schiit-happened-the-story-of-the-worlds-most-improbable-start-up/6855#post_11730790
If you were hoping that I was going to disagree with Jason, then I'm going to have to disappoint you... I don't disagree with anything he said. Delta-Sigma DACs were designed to deliver the best possible performance and price/performance ratio -
BASED ON WHAT THE OVERALL DAC MARKET ASKED FOR. You can pretty well guess that this includes low noise, high precision (accuracy), low distortion, and other such things. Since TI, and their competitors, sell literally tens or hundreds of millions of DACs, and there are several alternative manufacturers offering competing products, you can indeed assume that they succeeded pretty well. However, you can also assume that the vast majority of their sales are to companies other than producers of small-market audiophile products, so it's quite possible that their priorities, and those of their customers, are different than yours or mine. Which makes it quite possible that a small company, with "audiophile priorities", may well be able to create a product that better meets "audiophile needs" by doing it a different way.
(However, it isn't automatic, and so it's also quite possible that the massive development and research budgets available to big companies do actually often enable them to produce a chip for $2 that really is better all around.) However, because there is a lot of competition, and most of their customers almost certainly do have lists of what they do consider important, and would probably notice if the chips they were buying didn't work exactly as advertised, I think you can be pretty certain that they aren't "trying to sneak anything by anyone".
The TI PCM1704 (one of the last remaining available 24 bit R2R DACs) was scheduled for end of life several years ago, but sufficient interest from audiophile manufacturers convinced TI to continue to produce them... at a price sufficiently inflated to compensate them for the aggravation of continuing to produce a product with high production costs and low sales volume. However, you will note that the part is now listed as "end of life" and the "recommended current alternative part" is in fact a Delta-Sigma type (it's actually a hybrid, where some bits are rendered "directly", but most are handled by Delta-Sigma circuitry). If you think about it for a minute, you will also realize that this status prevents most larger companies, and those with large design budgets, from using this chip; after all, who is going to spend a lot of money to design a product that uses a particular part, knowing that the part may soon become unavailable? Someone who builds products ten at a time in his garage, or even 100 at a time in a small facility, can afford to use a part until the bin is empty; but someone who plans spend $1 million designing a unit which he hopes to sell 10,000 units of next year, can't risk having to redesign it all over again when he hits the bottom of the bin.
The problem that I find with many audiophiles is a tendency - which I share - to "enjoy the chase" and to "seek for treasure". Quite simply, we would rather believe that we've "found a treasure made by a little old guy living in the woods" than that the mass produced $2 part made by TI just may be superior. The subject then drifts into "the objectivists", who are usually characterized as "only paying attention to the numbers", and who like the $2 chip "because it measures well", and "the emotionalists", who honestly seem to just plain be unable to even consider the possibility that a cheap mass-market product might actually do what it's supposed to do pretty well, and often end up insisting "it just sounds better to me". (SOmetimes they are able to bakc up that claim in a real double-blind test that excludes their expectations from the equation; other times not.)
(Another not-very-well-kept marketing secret is that "exclusivity and scarcity breed perception of increased value". In other words, tell someone that they're part of an exclusive group being offered a product, or that "they may not be available soon", or "we only have a few left", and most people will automatically "feel" that it is more valuable and want it a lot more. THis is very well known, and is the basis of every "quantities are limited" and "exclusive offer" ad you've ever seen on TV. Since R2R DAC chips, like the PCM1704, are legitimately "scarce and soon to become unavailable", you also have to assume that the fact that they are tends to bias people in favor of their being "rare and valuable" - which, in turn, leads people to expect "something special" from them.)
There are more than a few small audio companies out there who produce badly designed audio products, based on faulty engineering, and which measure and sound as bad as that would lead you to believe, but who still have a "loyal following" of people who simply like the way they sound. (Please note that I absolutely do
NOT include Schiit Audio in that category. Their products are well designed and, as far as I know, all perform as they were intended to.)
As for what role expectations play in what we hear, and what degree marketing influences what companies sell, I'll just leave you with one comment about Schiit's products....
If they didn't want the knowledge that it's an R2R DAC to influence your opinion of Yggdrasil, then they wouldn't tell you it was an R2R DAC.
My point, though, is that the fact that it costs more to build an R2R DAC is simply a fact.
It does suggest that the current market doesn't support the sale of quantities of R2R DACs.
However, neither of those in any way suggests that R2R DACs are (or are not) inherently better.
Therefore, as a bottom line, I'll give you the same advice that Jason usually does....
If you've got $x to spend on a product, listen to all (or at least several) of the options in your price range, and buy the one that sounds best to you.
