Help: Order of importance: Pre, Amp, DAC, speakers

I am a bit confused now. I bought a pair of 1.3SE's with an Sim Audio i7 and a benchmark DAC1. I am very impressed with the results. A buddy of mine came over with a pair of generation old Tannoy reveals which performed remarkably with the setup, very close to the 1.3SE. Now I am a bit stupified why I should spend so much money on a speaker. Am I just dreaming? Does the Pre, amp and DAC really shine above a speaker purchase? Thanks for the feedback!
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Does the Pre, amp and DAC really shine above a speaker purchase?

The system can only shine as much as the speaker will allow but good electronics is a great start.

Both the speakers you tried are very similar in size and design and purpose (near-field monitors with low levels of distortion). I'd give Dynaudios the edge - they should sound smoother and more natural (btw: they are a much more expensive speaker so they ought to sound better).

To get a signficant upgrade in speaker sound you may have to consider much larger speakers without bass assistance from a reflex port (a large three way for example). This will give you a cleaner transient response in the bass and greater dynamic range without compression/distortion.
Speakers far and away.

A system is a chain. The electronics preserve the detail and clarity, as well as control the dynamic snap and bass inpact that the speaker can develop.

A higher quality speaker may not necessarily shine unless all the finer points of the system are up to snuff, this means cables, power conditioning etc.

A larger floortanding speaker will generally give you more sound a bigger image and more bass. So a speaker which is one mini monitor ie the Dynaudio vs a Tannoy may not be that shocking of a difference just one of more resolution hence your experience.

In answer to your query all parts of the system are inpportant but I have allways subscribed to speaker and electronics first before cd upgrades. The better the resolution of the speakers and electronics the easier is is to hear the difference in the front end.
I would say Both extremes first:
Speakers and transport.
Electronics do a good job most of them as long as you pair them correctly (an 8 watt SET and 86 db efficient speakers is a bad pair). Yes the preamp is very important, or the inexistance of a preamp...biamping also jumps you far ahead.
Most of the money should go for speakers and transport, but you have to shop around, of course you can find very expensive bad products, price is not an insurance for quality....(general rule no pun intended).
Speaker for personality - and more obvious.
Electronics more subtler, but ultimately more telling as realated to detail and nuance. The speaker can only be more less accurate to the source. The electronics define what is possible for the speakers. You have to start up front. That being said, there is proabably more variability betwee n speakers than between electronics.
Source > Preamp > Amp > Speaker

Everything matters, but if you are going to have a heirarchy, your source should be best and things should get gradually worse as the signal heads through the chain. Starting with maximum resolution at the source and then throwing bits away as you go will give better overall sound than any other variation. Ivor T. of Linn has taught this theory for many years. Garbage in > Garbage out.

The loudspeakers are your window into the sound of the electronics and the recordings themselves. No amount of money thrown at a great speaker can recreate or repair a flawed signal from the electronics. Actually, a really transparent speaker will show you more of the limitations of weaker electronics.

Ideally you want to have all things at a comparable level even though it rarely happens in the real world.

Imagine your playing a grown up game of pass it on. You are the captain of a team of 4 players who have to have a very long series of numbers whispered to the first player and then that person must retain as much of the string as possible and whisper it to the 2nd player and so on and so forth. The four players on your team have memory retention abilities which range from poor to superb. As the team captain you must pick the best batting order. What do you do? IF you put the player with the worst memory first, you will have a disaster. That player will lose much of the information right out of the gate while insuring that the better players don't even get the chance to use their superior memory skills to help the team. Your best order would be to have the best player first, 2nd best player next and so on. The same is true of the heirarchy of your stereo system.
Ivor T. of Linn has taught this theory for many years. Garbage in > Garbage out.
True, but Linn touted this *particularly* at the time they were only selling source components in the audio market.

While losses incurred fm the source cannot be regained, true, the spkrs (& their placement) are ultimately the "lossiest" of all items in a conventional chain.
Nobody has mentioned power conditioning in this discussion. Although good highend equipment with solid internal power handling does a pretty good job of insulating itself from lousy ac lines, I was shocked how much improvement came with addition of my ps audio p500. The difference was kind of shocking.
The room.

Sorry--couldn't help that, but I do think the room and the speaker interaction (thus speaker selection is very important) are the most critical things to getting good sound.
With some wonderful exceptions, speakers tend to be the most expensive component to acquire. So starting at this end of the chain makes the most economic sense to me. Ivor is right about GIGO, however even a great source can sound crappy through inexpensive or badly matched speakers. Now that digital/analog front ends are getting more sophisticated (read: expensive) it might prove to be a wash. But, IMO, I'd start with speakers.
Your turntable will be your most important component.....;-}

If you don't have one, you should.......

IMHO, "order of importance" is determined more by the difficulty of matching/synergy that any component presents than where it stands in the chain. Because of that I consider the speaker selection is most important. Speakers not only present the greatest variations in sound but also present the greatest room/set up challenge. Nothing is easy for the neophyte, but with some research about speakers and a subsequent commitment to obtaining the 'sound' that they are capable of producing is easier than trying to back speakers into an established electronics chain. FWIW.
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Sorry, I am old and can't half see anymore and I agree that power conditioning is just one factor. It is really hard to identify any one thing as most important. To me, it is a question of system matching that really holds the key ; this is a very elusive quest and I think the one that most of us are attemting to attain
source, preamp, speakers, amp are equally important but old addage, garbage in garbage out is true.
IMO the components that have the most effect on sound are (in order)

Speakers, amp, pre, source/DAC (these are the same thing, really).
Just my 2 cents. I purchased the best speaker I could afford 25 years (Kef 104 /2's ago and drove them with an Onkyo TX4500 reciever at the time. I then systematically upgraded the electronics with moderatly priced seperate componenents. Each step made the speakers sound better and better. Ultimately, I had a set of target price points in mind and a performance level that I wanted. So, using the garbage in... garbage out theory...aka build from the source upwards... I purchased in order a Levenson 31 transport, then a Sonic Frontiers DAC, then an Audio Research LS 15 Pre and finally a Classe delta 2200 Amp. Each step gave new life to the speakers. Now I am at the stage where my speakers and DAC are the limiting factors. (Well... really its the budget...but ). So, My advice would be... Identify a goal and come up with a flexible plan that gets you there in the time frame you are comfortable with.
Tcatman, I agree with you 100%....
One's speakers and the acoustic properties of one's room and set up are by far the most influential elements in the sound one hears.

The difference between a $1000 pair of speakers and a $10,000 pair of speakers will in most cases be staggering, but the difference between a $1,000 amp/preamp/cd player and a $10,000 amp/pre/cdp will often be quite subtle.

Even the best speakers produce relatively large amounts of distortion and have frequency response deviations of +/- 3db. Most electonics produce <1% distortion and have a frequency response within +/- .1db from 20hz-20khz.

No matter how linear and distortion free one's speakers and electronics are, once the room comes into play everything goes out the window. No transport will fix a -15db null at 50hz.
The difference between a $1000 pair of speakers and a $10,000 pair of speakers will in most cases be staggering, but the difference between a $1,000 amp-preamp-cd player and a $10,000 amp-pre-cdp will often be quite subtle.

This is a partly true statement. At the entry level where speakers at or below $1000 are a possibility, the speakers are tremendously important. Speakers at this level are very limited and tend to have lots of colorations. But with higher end systems where the speakers are never going to be less than $3-4K, there are many very capable loudspeakers, all of which can do a very good job. Here the electronics become much more important. I would also disagree that the differences between a $1000 amp/preamp/cd and $10,000 ones are subtle.

but Linn touted this *particularly* at the time they were only selling source components in the audio market.

Actually, Ivor is still saying the very same thing, as he just did in the recent magazine interview/debate with David Wilson (Stereophile, I think).
I would have to agree with Rives. The *room* is the most important. I recently moved to a new house and was startled at how different all my gear sounded. But I knew it was going to sound different anyway.

First, make sure your room is acoustically right. Then choose the speakers for your room. Then choose an amp to run the speakers. Then a preamp for your amp, and finally the source.

For quick demonstration of the importance of room acoustics, take your current speakers into your bedroom. Or push them flat against the wall. It will sound massively different. Now, swap your CD player for another make. The difference will be more subtle.