The outboard power supply is a must have. It is night & day and if you have an FM tuner in your system, the wallwart that comes with the Squeeze Box may degrade the FM signal (actually, in my kit, it did add interferance). (I also upgraded the umbilacal from the power supply to the SB). Ncarv is absolutely correct that you could get a dac with multiple inputs and it would give you a bit of versatility, if not for now, definately down the road. I purchased a Benchmark DAC 1 (no USB) and used the additional inputs for my Masterlink, which was a nice upgrade in the Masterlink's sound. (I still have an input free as well-it has 3) Keep in mind, as technology changes in the future, as we all know it will, you can always sell the outboard DAC and, well, upgrade (again). The Squeezebox had to set you back $200+, depending on how/where you got it, so you would lose that investment if you went with the transporter--not to mention, at $2,000 for the Transporter, your stuck with that internal dac for a while. I picked up a Musical Fidelity xDAC V3 for my PC, used, for, like $500 tops (I went with the outboard power supply - X PSU V3 (and upgraded umbilical) - on that as well, but you may not think necessary, or you can always add it down the line. There are quite a bit of used Dacs on audiogon that may hold you over until you see what's what. I see you have an AR CD Player--any chance that has digital inputs? If so, there is your outboard dac!