Digital input means the preamp would need to include a D/A Converter within it's architecture.
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Well, Mitch4T, check out the McIntosh C48 and C50 pre's. They have 2 optical, 2 coaxial, and 1 USB port. I have one, and for me personally, they could've left that nonsense off. I hate paying for technology that I personally will never use. But for you guys who think you need it, this is a superb preamp. It has a superb DAC in it for this.
Part of the reluctance on the part of manufacturers to build, and consumers to buy, a single box with both preamp and DAC might be that DAC technology is changing so quickly. Keeping them separate has the same advantages as other separate components provide, a simpler upgrade path and more choices in tailoring the sound to your liking.
I think the convergence of preamp and D/A converters will accelerate. There are any number of D/As that function as preamps. I believe Theta was the first to do it, but there are excellent to state of the art offerings from Benchmark, MSB, Wadia and Esoteric. And I think we are going to see more products like the McIntosh C48 (a very good, but not great digital section) which are full function preamps with digital inputs. As a product niche they make a lot of sense and have no downside. The D/A can be designed as an add on circuit board card, much like some phono preamps, which can be readily replaced as new technology advances.
Okay, I'll fess up. I'm an Audio Research fan through and through. I was hoping that AR would do this in their Reference series preamps going forward. As Onhwy61 said above, they could build it into the preamp in a modular fashion whereby they could swap out a module on the chassis to update the DAC. I believe if a few of the recognized audiophile names like Krell, Audio Research, Conrad Johnson, Pass Labs, ect, built such a unit, it would standardize the concept and the rest of the high end community would fall in line to be competitive.
And we're now seeing more and more items marketed as dedicated DACs that can also do some source-switching and volume control -- that is, act as a preamp in their own right: Benchmark and the new Bel Canto 3.5 come to mind. So, seems indeed like there is a growing convergence. That said, suspect that there will always be a place for stand-alone, single-purpose units.