I was recently asked where the biggest improvements can be made in sound quality at home (assuming you’re listening to high quality audio sources in the first place). My answer was – speakers, room and DACs. If you already have better than cheap computer speakers, treating the room may be the most important step in this chain, but generally modest improvements in the speakers will probably yield the highest return in sound quality.
Most people aren’t aware of how much their room shapes the sound that they’re listening to, but improvements in quality can be made relatively cheaply.
Digital to Analog Converters are probably the next step to consider in improvements to audio quality. The DAC converts all those 1’s and 0’s into an audio signal to send to your speakers. A cheap computer soundcard may add some noise to the final output, whereas an External DAC will probably provide a noticeable improvement.