The uncompressed ipod files sound as good as cd
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There's no simple answer to your question. It's like asking what's the audio quality of vinyl.
The iPod can store CD-quality audio files, as Tarsando said, or compressed files that trade off audio quality for convenience in degrees according to the amount of compression.
The limiting factors in the audio quality of the iPod itself are the quality of the amplifier and digital-to-analog converter inside the device. You can bypass the amplifier by using a line-out connection from the dock connector but bypassing the DAC is, at this point, an expensive proposition.
Assuming lossless or uncompressed files and a good set of headphones, you'll get very good, but not great, sound out of the iPod. I do agree with Sfar that the iPod's DAC and amp are the limiting factors in its sound. I know I must be in a small minority considering how many people use the things, but I find the iPod's sound very fatiguing, even at low volume. I've used Etymotic ER4Ps, Grado SR 60s, Sennheiser 280 Pros, and AKG 501s with mine, plus the stock earbuds, and it's the same. I've spent a year wishing I enjoyed it more, but right now I'm planning on selling my 30G.
I should note that some iPod modders exist out there and that a good headphone amp can help, so you might pursue those routes. If you can, borrow one and see how you like it--it is convenient, and that can be a big selling point, especially if you travel. Re the iPhone: it doesn't have much disc space, so you won't fit many lossless songs--if you want good sound quality, go for the storage space of the iPod Classic.
I find the sound of the nano and shuffle on anything but rock and roll to be fatiguing. But the 80 gig classic with lossless sounds great to me on classical.
One key is that I use Westone 2's which are NOT hot in the treble, definitely offer a more natural treble. I had a chance to test a variety of high end in-ear phones at a show and I found several of the high end ones, which did sound wonderful to me, might not be the best match for a iPod in that they were too revealing in the treble. For example I felt that way about the Shure 420 and 530 (but not the sure 210 and 310). This is based on just a few minutes testing so take it with a grain of salt, but, I'd rephrase your question to be not just about the iPod itself, but about teh full package: iPod, earphones, choice of music, bit rate, etc.
Rewine is excellent idea.if you get a chance to hear the Redwine 3 amp with some speakers that will sing with 30 SS watts it's something special.Also Vinny mods the Olive server.All good products.I never know what to make of these questions because until, they make a recording format that will not crash like HD or c go bad like many CD-R's do within 4-10 years it's only game in town.Think they are fun adjuncts to LP's and punched CD's but are prone to fail.But getting laptop,filling up now inexpensive Hard Drives and using uncompressed,lossless formats are fund adjuct.Makes me think that embedding a HT receiver that can accept USB (and gives many decoding choices that with separates is hard to keep up on) makes sense.Or Wifi it like with Olive server.
If you have only heard a 30GB ipod, you must audition one of the new ones. With each generation the sound has improved. The new 160GB model sounds A LOT better than your 30GB. Still not a replacement for quality digital, but for what it is, it's getting a lot better. A set of the higher end Shure headphones straight into the ipod is not bad at all.
Ejlif, there is a debate now about the sound quality of the new Classic 6th generation Ipod versus the prior 5th generation Video ipod. Although the signal path is apparently more direct, Apple sourced a new DAC some feel inferior to the Wolfson (familar to many audiophiles) that was in the 5th gen. Video ipod. Do you have any direct experience with this as it would seem to dispute your claim of sonic improvement with each new generation, at least where it concerns the most recent upgrade. I don't know myself but would like to purchase my first one for the gym.
My iPod is fifth generation, and while I haven't heard the 6th generation (and don't know whether the DAC change is a step up or down as Jamnesta said), I'd want to give the 6th a good listed with the headphones I planned to use before buying. Maybe you can do this at Apple stores? Bought mine online, so I don't know--or how you could have your music in your format to audition...
I had the same experience Art describes but with the ER4Ps--full resolution resolved things I didn't want to hear, so I hopped on the headphone merry go round only to conclude it was the iPod, not the 'phones. Maybe the resolution thing is why Apple partners with Bose? On the up-side, the iPod did get me into headphone listening for the first time, which I now do often on my K501s at home.
I did multiple comparisons between the newest (6th generation?) vs my 80GB 5th. The 160GB was noticably better. I only compared on a set of Shure E500 phones direct into the ipods as well as on a Monitor Audio ideck system. I thought the 160GB was better, just plain better in the same way we hear improvments via better digital. The difference between the 4th gen and 6th gen is even more shocking.
In a room full of audiophiles I feel confident in saying all would agree that at least among the ipods I have, that the 6th gen is handily better!