Using Airport Express/AirTunes.

I'm interested in trying the Airport Express AirTunes with iMac/iTunes and DAC. What is the best connection/cable (mini-jack to RCA or optical and made by who)? Also, I assume the AE has a D/A. Can it be bypassed or will it convert/compress my Apple Lossless music files?

I need a solution to use iMac/iTunes w/ Reimyo DAP-777 w/o having to spend $1K's more on overpriced USB or FireWire converters, or use a lot of additional devices, cables, and wires. I used a iTransport before. Now trying a Squeezebox Touch but it's having constant "Re-buffering" issues w/ both wireless and ethernet. Need a solution to use iMac/iTunes. What about using an iPad? Is there a way to use that as a streaming device?
Addendum: Would AppleTV be a better solution to AE?
The constant rebuffering thing with the Touch may be your router..... I had that very same issue and changed the settings in the router... allowing more bandwith... and no problems since.
I have an AE connected to my integrated amp utilizing a monster cable with RCA connection. My AE is set up through an existing wireless network . I downloaded i-tunes from the web and it recognized my AE immediately. Yes the AE has a DAC but only does 16/44.1 and yes you can by pass it using the optical out into a DAC.

Airport Express has, according to Stereophile review, decent low jitter optical out and less then perfect DAC (what can you expect for $99). It has two problems: Limitation of 16/44.1 and lack of clock between songs resulting in a loss of few seconds of next song when DAC is slow to sync(crossfading in Itunes being remedy for this). My Benchmark DAC1 doesn't do it and all my music is 16/44.1 but when higher resolution downloads will become more popular I might switch to Apple TV (that costs the same) or similar. AFAIK AE uses ALAC format for transmission - that is my storage format. Remember during installation to "join existing network" instead of creating separate network. Also figure out frequency of your microwave (manual) and switch to channel far away - unless, of course, you can use 802.11n that operates at 5MHz. Unfortunately I have old Mac Mini that does not support it.
Streaming either wired or wirelessly from a Mac to the Airport Express, then via the optical mini-Toslink jack on the AE to an optical input on a DAC works very well.

That does, indeed, bypass the internal DAC of the AE and there is no impact on Apple Lossless files.

The usual recommendation is to use a glass Toslink cable, I have one I bought from an audiogon member who no longer sells them here but there are other sources, I've seen the Sonicwave cables sold on Amazon recommended highly.

If you're going to stream wirelessly it's definitely worth ensuring that both the Mac you use and the Airport Express you get have 802.11n capability, rather than the older 802.11g standard. Newer ones all do and that helps ensure you won't have interference issues.
Sfar, I agree 802.11n is the best option since I have dropouts with 802.11g (on occasions only). 802.11n is using 5GHz (5MHz in my previous post was a typo) - less polluted band far away from microwave ovens and cell phones.
Kijanki - yes, I had problems with interference from a microwave oven when I first put in an older Airport Express but was able to fix it in that case by switching channels from within the Airport Express utility application.

If I remember correctly the default channel on installation is 6 but changing it to 11 solved the problem with my particular setup.
I've also had rebuffering problems with the Touch, and I believe it is a known issue. In my case it was probably in some of the network settings I had (which were mostly default). I spent some time going through all my settings, and my Squeezeserver settings, and eventually figured it out - not a hiccup since after several months. It was highly annoying when it was going on though, rendering the system useless. Regrettably I do not know exactly which setting did the trick, but if you Google the issue you may find some suggestions. I would point out that it not exclusively a wireless network problem, as I initially thought it was (and tried many of the things being suggested here). It may have had something to do with the buffer/streaming settings. All the suggestions about wireless are absolutely spot-on in being possible solutions, but none of them solved the problem for me. The OP indicated that he has the same problem via Ethernet as well, so I'd say you could probably rule the wireless solutions out.

I've used the AE and prefer the Touch in virtually every way, especially sound quality, both as a DAC and streaming digital data to a DAC. The AE always seemed to compress both dynamics and soungstage (at least that's how it occurred to me). Per Kijanki you will not be able to get full resolution from hi-rez files via AE (No problem via wireless on the Touch). It would be worth it to take the time and effort to sort out the problem with the Touch if you have the patience, or can enlist a friend who is fluent in Geek to go through your network and Squeezeserver settings with you. Definitely put a stress on the fact that the problem occurs with Ethernet as well as with wireless.
My experience with the Airport Express and a DAC has been better than Jax2's. Comparing the output from the AE with the same music played from the original CD using a transport and the same DAC there's very little, if any, audible difference to me.

I have never tried a Squeezebox Touch, however, so I can't comment on whether it might be a better solution for you and I don't yet have any high-rez audio files so that's not an issue at the moment.
Sfar, It might be dependent on the DAC used. All of them suppress jitter by means of PLL or asynchronous resampling - some more some less. According to Stereophile review test AE is bit perfect so jitter is the only possible difference. Benchmark DAC1, I use, supposed to be jitter immune but many people reported different results with different transports. Since results were not in par with the price (that has some correlation with jitter) and often very cheap players sounded the best - it makes me believe that there might be something else going on (ground loops etc). On my system I cannot tell the difference between AE and DVD player used as a transport - they sound identical.
Thanks, Kijanki. I've had the same experience of not hearing a difference between the AE compared to several different DVD players used as transports.

I have used the AE with several DAC's, including the first version of the Benchmark, and the DAC's do sound quite different from each other. In each case, though, the transport and the AE sounded essentially identical, as far as my ears could tell.
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Thanks for the insight. AppleTV would seem to be the better solution (better optical connector, PS,..etc), although it has a cord. The AE is more compact, no cord (plug directly into power conditioner), but has mini-optical output, probably poorer PS,..etc. and as some have pointed out doesn't sound as good as AppleTV. I'm sure plugged into the power conditioner, and even having it modded with better PS, connectors would only improve it.

My iMac and AEBS and AE all support 802.11n. No worries there. And with regards to the SBT rebuffering issues; I've tried every setting/combo with Radio Modes, Multicast Rates, Interference Robustness,..). However, I don't see adjustment settings (buffer/steaming) for Squeezebox Server or SBT. And if it's a known issue, then it's been known/ongoing since SB3.

I have an AE I could try but no optical cable. Annoyed that I bought a D-60 for the SBT. The $99 to try AppleTV is not much (can always return it). Plus I can pick up an decent optical cord for not much more. I came across mention of the van den Hul Optocoupler mkII being quite good.

But at this point I've given up on the SBT. It's not just the rebuffering issues, but I'm also disappointed with the GUI. I expected something more like iPod Touch. A rather rudimentary designed UI. Not very intuitive either with navigation.

I've also decided to give USB converters another try with the Halide Bridge. This gets a lot of priase and I'm very curious as my experience with these devices 3-4 years ago was terrible, even USB DAC's from $1K to $3500 didn't satisfy me (compared to what I was accustom to hearing from my previous Accustic Arts CDP. Up until recently I used the iTransport/iPod -> Reimyo DAP-777 and was beyond satisfied. I've always wanted to use my iMac/iTunes/Front Row as a music server though with the Reimyo, but without having to spend a lot more on over priced digital interfaces and w/o having more devices and cables and wires. I want to keep it simple. Hopefully I can find some peace with either AppleTV or the Halide Bridge.
I bought an AppleTV and Audioquest Opt1 to try. Forgot I need a monitor (not for AE) to set up AppleTV, right, even if only using it for audio output?

$89 for AQ Opt-1!! I didn't have much of a choice if I want an easy return and didn't want to spend a lot for auditioning this set up, but I also don't want the quality of the optical cable to be the reason the sound isn't satisfying if there is a better choice.
This isn't going to work, is it? I need a monitor with AppleTV. I thought I could use my iMac/iTunes to control the music and stream through AppleTV, like AirTunes w/ AE. I set it up with my TV, have Home Sharing and AirTunes turned ON, but I don't see AppleTV under Pref>Devices, nor any way to control it from iTunes on my iMac. It should be able to do this. Disappointing. Another added expense - monitor. Now I'll have to try AE and get a mini-optical cable. Time to order Halide Bridge.
D'oh! I just discovered I can control AppleTV as a remote speaker with AirPlay via Remote app on iPhone. Very cool. *bright idea* iPad as streaming music server. My original idea. Why didn't anyone tell me? That's an expensive remote control.
I rarely use the Remote app and unfamiliar with new iTunes settings and use of AirTunes. Only problem now; playback is still plagued by interruptions, like with Squeezebox Touch. Damn! It has to be some wireless setting, bandwidth, or simply the wireless signal strength. I'll have to try moving the AE closer or adding another one. This is fantastic. But my initial impression of the sound through the optical is rather dulled down from before with SBT. Could be the AQ Opt-1 IC. Plus, the DAC's OPT input has never been used.
Playback was going well this morning, but then it dropped out for a second after about an hour, and again later. Not as bad as with the SBT but still an issue. It has to be the wireless signal strength.

Being able to play from iPhone 4 w/ Remote app, or iMac, is great, but the interface is a bit unintuitive. It also had some difficulty with choosing AirPlay speakers on both iPhone and iMac. I didn't realize also that iTunes app had to actually be running. I thought it would find it like Squeezebox Server.

I have a couple options for controlling the AppleTV as a music server now; as now with Remote app from iPhone 4 or iMac, or buy a small LED w/ HDMI using AppleTV directly, or with an iPad via Remote app. The iPad could be set up on a charging dock acting similar to a Sooloos touch screen. Is there a way to connect the iPad to AppleTV or is it streaming only via AirPlay w/ Remote app?
Continuing issues with AirPlay through AppleTV. I have to accept the fact that wireless just doesn't work in my set up/home. Funny, I can see neighbors wireless networks, barely, but my own network, which my iMac see as 100% signal strength and is ten feet away from AppleTV, yet can't handle transmitting the music through the network in the house to it. Ridiculous. Is the answer more AE's? I hate that I have to keep spending more $$ to figure out an answer, find a solution with wireless, and how simple it was with iTransport/iPod - voila. Unfortunate because the sound isn't that bad with optical. Wireless is unreliable, unpredictable.

There must not be many MAC users with wireless here. Apple discussion forum not of much help either.

Talking to myself....
It's possible you are getting some 2.4ghz frequency interference from other devices in your area. Can you hardwire the AppleTV via Ethernet? That or get a 5ghz router. If you are getting a strong signal adding additional AE will be a waste of money. That's not the problem.
Here's something for you to consider: Avoid streaming. I used to stream from my MacBook Pro to an Airport Express, then bypassed the AE DAC by using an optical out from the AE into my Benchmark DAC. Recently, I cut out the streaming by putting all my music on a Mac Mini with a direct connection to the Benchmark. No more streaming, which results in better sound IMHO, and here's the neat part: I use the "screen sharing" feature on my MacBook Pro to control the Mac Mini/iTunes, which is a wireless connection. In other words, my MacBook Pro serves as the screen of the Mac Mini. I'm still wirelessly controlling the music, but the music travels through a direct connection rather than streaming. Great setup and the Mac Mini can be tucked away on my rack.
That's easy to say in hindsight, not if you haven't tried it before.

In the end... the sound was terrible from AppleTV via optical. And wireless didn't help. I discovered there's a "Bermuda Triangle" wireless zone in that part of my room where the audio system sits. I was able to improve it somewhat with rearranging the order of the AE and AEBS units but it would require adding one or two more AE's to make it more reliable. No point though as stated above.

Also tried USB converter. Awful. Going back to what worked before; iTransport/iPod. The 171i this time.
wow, i was just thinking of building a digital music server using AE but the thought of dropouts and such has scared me off (anyways, i do have SB3 so may as well try it first).

seems best solution is to keep things hardwired, no?
If you like sound through optical w/ AE give it a try, but SB3 via COAX will be superior. Depending on where your set up and surroundings, distance between devices/wireless network router, external interference,..etc., it may take using multiple wireless devices to get the proper coverage. The only way to know is to try it. And yes, ethernet cable solves all that.
Best bet is to give it a shot, I do not experience any dropouts or issues with with the AE in my two systems that use them.