The Wadia i170 is licensed by Apple so that the data is taken in digital form from the ipod, (ie bypassing the ipod's DAC and headphone applifier)That way you can use an external and presumably higher grade DAC and amplifier.
THis is what is on Wadia's website:
The iTransport is the first ever component specifically designed to transform your iPod into a high-resolution audio/video media server. The iTransport combines the convenience of personal audio with the performance and connectivity of your home audio/video system, delivering bit-perfect digital audio signal via S/PDIF coaxial (RCA) output, DVD quality video via component outputs, and built on a sleek aluminum chassis.
When the iPod docks with iTransport, the iPod transforms into an audiophile-grade media server that rivals some of the top performing digital source components available. Experience the iTransport for yourself at a Wadia dealer nearest you.
THis is what is on Wadia's website:
The iTransport is the first ever component specifically designed to transform your iPod into a high-resolution audio/video media server. The iTransport combines the convenience of personal audio with the performance and connectivity of your home audio/video system, delivering bit-perfect digital audio signal via S/PDIF coaxial (RCA) output, DVD quality video via component outputs, and built on a sleek aluminum chassis.
When the iPod docks with iTransport, the iPod transforms into an audiophile-grade media server that rivals some of the top performing digital source components available. Experience the iTransport for yourself at a Wadia dealer nearest you.