What s wrong with this picture?

I'm putting the finishing assembly on a new computer. It has a 1.2GB processor, 512MB of RAM, two 20GB hard drives, a CD burner, a video card with 64MB DDR memory, etc, and it all cost about $1000. ...and you want how much for that DAC??
I hope you are both very happy, at least until it is obsoleted next month.
You have never studied economics have you.Every part you put into the 1k obso;ete a month from now computer is MFG in quantity of 10 Million +.The DAC you want how much for does not use the cheapest parts available and may be only in QTY of 500 maybee 1000.
Try buying a 1 GIG harddrive for a Honeywell TDC 3000 Distributed Control System. 5k + why.Very low production.
So Economics 101 might help you.
Leafs you are so right on regarding enonomies of scale. The equipment that "we" buy is hand made in small quantities with quality components. Then add in the design engineering & all overhead; it's easier then to comprehend the price structure of high-end even, though it sometimes appears (and sometimes is) pretty ridiculous.
Interesting to see that you're involved in Big H's process control... I used to work on that stuff myself; now doing Satcom.
I don't see anything wrong with either picture. High end audio is like our wives... If this was on a cost per basis, lunar landings would start to look cheap. I figure that when you want the last five percent of quality you have eliminated the first ninety-nine percent of buyers.

So, if you want really good, no problem, get it wholesale!

If you want the VERY BEST, join the gang and pay for it.

Bill E.
Since when does a Pentium or AMD chip make a good digital to analog converter?? Try reselling it tomorrow and you'll see what its worth. If your computer is not a DELL, Compaq, Gateway, or IBM or other name brand, its already lost 50% of its value before you turn it on.
As many others stated this hobby is for people who truly love music. Not for people who truly love equipment. A pc is of no comparison with audio its resale value is awful because the pc industry moto is " here today gone tomorrow" technology changes so rapid. With audio at least they hold a cd format for some time before trying to bend us over again and shoving the $8,000 worth of redbook cds up our ass! (thats what I own many others have two and three times more than me) and now we need to buy a new cd player to play the new format and spend $25.00 per disc and to really not have the desire to listen to the redbook cds as much because the new format is much improved.Its all about money and if you want the best you must pay for it. And the sad thing is there will always be better than what you have. Live and learn.
Your grandparents no doubt thought, for a while at least, that those 78RPM records they spent so much collecting sounded absolutely awesome. Then came the black vinyl LP. Replace the library. Then came CDs. Replace the library. Now DVDs and SACDs. Replace the library. And of course if you wanted to make a copy of your recordings to take along with you, the chain of events went 8-track, analog cassette, digital cassette and CD, etc. Movies went from video cassette to LD to DVD, and soon you'll just plug a card the size of a credit card into the side of your TV. Trust me. It's already been demonstrated. You either improve with the times, or just keep playing those 78s you got from Granny.
The other side of this issue is to say 'OK, it is too much, I will build it myself.' As an ardent DIYer, the answer comes back, yes, I did save money, yes, the unit is competitive with the very best and my god it sure took a lot of blood, sweat, tears. toil and time to do. One caveat with DIY: that is re-sale value is nil. So either way, you pay. The DIYer pays less on the front end but more on the back end (if tries to sell) and invests more time in the bargain. The bottom line: Enjoy the music--any way you can.
Another perspective is that Doclb was doing the proverbial apples to oranges thing. Try omparing that PC to something from The Good Guys or Best Buy. Compare the DAC to a Sun Microsystems or Hewlett Packard UNIX workstation. Much better analogy to cost of goods, size of relative market, amortizing R&D costs, as well as fit and finish.
Hmm... my Aranov mono blocks don't crash every half hour, haven't got a virus yet and in no way further contribute to Bill Gates estate.

Now let's take the logic of the opening post one step further. Order any garden variety $1K Dell. Then tell the Dell rep you want all wiring to be hand soldered Cardas point to point, throw in some nice Russian tubes to sweeten up the $29 SoundBlaster card and make sure to wire those PC speakers with Nordost Valhala cabling. And you want how much for that PC now!

Gee, we haven't even biwired those 300 Watt THX certified plastic speakers yet.