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Maybe the onboard storage isn't a mandatory, but I do like the idea of a simple all in one - I don't mind the cost for convenience. I have so many USB external drives floating around that it just gets annoying.
When I say large, I mean 125 - 250GB should suffice for a pretty vast music collection, even at high bit rates. And do it with solid state memory. Obviously expandable via external source.
The reason I like local storage is because the general broadband speeds are not fast enough yet. Maybe it's just my household ( 3 people ) but our router and connection struggles when we are all online at the same time. Eg: One person streaming a film, someone else will have downloads going and maybe a bit of uploading etc. but I've had buffering issues with spotify in this scenario.
I have to say, I hadn't considered the Pi + soundcard option. That would be a nice little project and while I'd struggle with the hardware I reckon I could design and build a nice case for it all.
Whatever this product could be, there's definitely a need and want for it. My current setup is so frustrating I end up just plugging my phone into the AUX of my amp and listening to whatever is on there!
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TRA
I'd strongly disagree with this.
Either it's cheaper to build your own NAS, or you can wait and watch cloud storage prices continue to go down whilst internet connection speeds are getting faster.
Building storage into "the little box that aggregates all digital music" suddenly makes it a big expensive box.
Whatever this new box is, it should focus on merging some APIs from streaming providers, and logically merging local and cloud storage. That's really it's prime job.
And ideally you'll be able to have multiple little boxes in your home, and thus be able to control and play music in different rooms.