Until recently I was using a mk 1 Cambridge Audio DACMagic. Can't comment on the DACMagic Plus, but the standard one is definitely lower end as far as DACs go - but still streets ahead of the Touch's built-in DAC. You will not fail to hear an improvement. I'm always amazed when I see comments stating that the Touch has a "good" built-in DAC. Good by what standard? The Touch on its own always reminded me of the sound of cheap CD players I've had in the past, whereas even a low-end external DAC will take it to the next level. In fact, I recently upgraded my DAC to a Geek Pulse, which is a lovely sounding DAC. However, I'd still say the improvement isn't as massive as the improvement of originally adding the DACMagic.
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