Since the Folio is designed with audio quality in mind, Pinnacle Audio is confident that the device's internal DAC will be adequate to satisfy most audiophiles. However, if you absolutely, positively, must use your own external DAC, you'll find both optical and coaxial digital outputs at the rear of the Folio.
I certainly can't fault the sound quality using the Folio's internal DAC, but then I'm not what you'd call an obsessive audiophile. In fact I hooked the Folio up to a set of Ferguson Hill FH007 / FH008 speakers, which, it has to be said, results in a pretty stunning setup from both visual and audio perspectives. Unsurprisingly, I found the output from the Folio's FLAC library to be literally indiscernible from the original CD, just as it should be with a lossless codec.
The Folio will also let you create your own mix CDs. You can create a playlist and burn it to a CD-R, which is handy for playing in the car. However, it's worth noting that the Folio will only burn audio CDs, and you can't simply burn the FLAC files to a disc.
A nice compromise would be for the Folio to rip a high bit rate MP3 file at the same time that the FLAC file is encoded, then the MP3 file could be used for creating CD libraries or even for loading onto a USB key - there are USB ports at the rear of the Folio. While chatting to Pinnacle Audio I was informed that this could well be possible with future firmware upgrades.
Used as the centre of a music system, the Folio has a great deal going for it. In fact sitting here in the office looking directly at the Folio surrounded by the achingly stylish Ferguson Hills, I can't help but think that I'd like to take the whole setup home with me. However, while the Folio definitely gets much of its brief spot on, in some areas it's wide of the mark.
For a start, the wireless controller for the Folio operates via your existing wireless network, so, if you don't have a wireless router in your house, your somewhat out of luck. Second, if you have a particularly large house, even if you do have a wireless router, the Folio's controller may not be able to reach it. And let's not forget that the Folio itself has to be connected to your home network using an Ethernet cable. Considering that one of the key points of the Folio is that you don't need a computer, there's a great deal of reliance on your ability to install and configure a home network.
I personally doubt that too many homes will have their wireless router in the same room as their hi-fi, so you're either going to have to use a wireless bridge or some kind of HomePlug device to get the Folio connected to your network. I can't help but feel that the obvious answer would be to have wireless networking built into the Folio itself, thus negating the need for external network devices and also allowing the controller to connect directly to the Folio, rather than having to take a detour via your router.
Sonos has successfully addressed this very issue by creating hardware that runs its own mesh network, thus allowing the controller to connect directly to the nearest player, rather than having to reach your wireless router. I appreciate that the Folio isn't a multi-room system, and therefore doesn't necessarily need a wireless mesh, but Pinnacle Audio has confirmed that multi-zone functionality is on the roadmap.