Let's get the obvious out of the way first: A CD player needs to be really good if it is going to beat a well-set up computer combined with a good da converter. But therein lies the clincher for both parties. A really good CD player costs a fortune; in fact a multitude of what most people are prepared to pay for a complete computer system. Let's say a very good CD player costs 4000 euro second hand. A computer or nice laptop costs about 1000 euro. You'd say case closed, right? Then again: for this computer to procuce sound anywhere near the 4000 euro CD player you'll need a very good DA Converter because the DACs on the soundcard inside the computer are only comparable to a cheap cd player. And you probably guessed it already: good DACs aren't cheap either. In the end you'll end up with about the same amount spent as for the cd player in my example.
Now that we've got the cost-aspect out of the way, let's go more into the specifics.
What is good sound?
That's a really difficult question to answer conclusively. Originally, the term HiFi (high fidelity) meant faithful to the source. Reproducing the sound as close as possible to how the music sounded when it was recorded. While this was valid in the 70's, these days the term has little or no more meaning. All consumer audio devices are capable of producing virtually distortion-free, uncoloured, flat frequency-response sound. Nevertheless, there's a wide variety of soundsignatures. Specifications therefore are of little meaning.
In all reviews I've conducted, each and every time again, it is obvious that computers influence sound quality in so many stages that it can be dazzling. In the most basic form, Windows itself is always interpreting the music signal, rounding it off, doing translations and feeding it through many stages of volume control and conversion. When optimally tweaked (see Best PC Audio Solution), still there is the influence of the operating system, software player, power supply, interface etc that influence the sound. What's more: there's a large audible difference between laptops and desktops and also between Mac and Windows. The best thing you can do is to experiment in an effort to get the best sound possible. That is, if you crave musicality over precision. You could also go the route of simply relying on the most accurate reproduction. This is something that can be measured. Some people might say that computer music reproduction is a matter of simply reproducing the stored data as well as possible. These people probably like accuracy. Other people might say that they want their souls to be stirred, no matter how coloured the sound might be. Let's call this aspect musicality. In less words: taste applies.
Now that we've got two basic camps, let's see how music reproduction applies.
If you like accuracy
-Computer Sound
If you like detailed sound that is devoid of colouration and interpretation, then it's easy to be satisfied with a computer system because accuracy is pretty easy for a computer. Delivering bit-perfect data is its main task after all. You'll have to invest in a soundcard with a digital output that supports native samplerates (ie doesn't resample everything toone common sample frequency). This needn't cost more than a couple hundred euro. Then you need the dac. But since we're in the "accurate is better" camp, we don't need a very expensive dac. I'll refrain from naming brands here as taste still applies. Suffice to say that you can have a new, very accurate dac for about 1000 euro or less. Never mind for now the type of interface cable because SPDIF, Firewire and USB are all capable of satisfying levels of detail and accuracy. But there is a catch. You've probably heard the term before: jitter. It is the magic term that's supposed to guarantee perfect sound. And in theory this is enturely true. But I've heard plenty examples of high jitter devices having great sound so I wouldn't attach too much value to this aspect. If you're interested in the specifics of jitter, look here.
-CD Player
Getting a detailed, accurate CD player is also not that hard. It needn't cost more than the computer system + dac above. But just buying the cheapest one available isn't going to be very pleasing. You may end up with accurate yet thin, artificial sound, devoid of colour and substance. But getting a CD player that is as accurate as the computer system described above is also going to cost you.
If you like musicality
-Computer Sound
Here's the thing: getting a computer to sound "musical" is very difficult. I know that musicality for one means something else for another, but I'm still talking about the hypothetical musiclover described above. For musicality to shine through, accuracy is much less important and jittervalues are only partially interesting. I don't know why but any computersystem I've tested, and I've tested many, sounds less meaty, less colourful, less spacious and simply less real than the best CD players available. Simply said: a computer doesn't get my feet tapping easily.
But in theory a Hard Drive should be much better at reading the bits accurately than an optical transport. So why is a cd player "better"? Well, maybe it isn't. It could very well be that the various servo's and correction-processes going on inside a CD player "colour" the sound, much like analog sound reproduction by means of a tape recorder, in such a fashion that we simply like it better.
I've found that the more accurate and minimalistic a computersystem is, the more unmusical it sounds to me. I know that some people are going to disagree but at least this is true on a comparative level: more accurate is not the same as more musical. I've also found that using special dacs and software that minimise jitter tend to sound indeed very accurate and highly detailed but too controlled. Too "digital". There I go again. Using terms that can be interpreted both ways. But I hope you catch my drift. By digital I mean, not fluid, not smooth or airy. Those kind of subjective values. A computer with a regular coaxial spdif connection sounded much more relaxed and fluid. It also sounded slightly less focussed. Of course it is a matter of balance and there are many possible combinations that result in sound that is somewhere between accurate and musical.
-CD Player
A musical cd player. That's also not an easy task. That's because the format is flawed to begin with. But there are many excellent players available if you are willing to pay the price. A lot of money. Sadly it is true that you get what you pay for. Never mind that we've made advances in digital, never mind that most players use the same transports and opamps. Trust me: there is a large difference in sound between the various cd players available. A cheap one can sound warm and smoooth but it will lack in another department. It will not be very focused or detailed for example. Another cheap player may be very open, fast and exciting but it will not be very musical. So we have to turn to the high end players. It is entirely possible to get very satisfying sound from a cd player. If you are willing to pay for it.
Hey, it's like the old battle between lp and cd all over again! This time though, CD is the good guy!
Bottom Line
As the above story illustrates: there is no universal answer as to which is better. It depends greatly on your preferences. But the positive news is that you can get very good cd players second hand at "reasonable" prices and at the same time that computer audio is very much a branch in action. Much is being done now and manufacturers are eager to jump aboard this new thing called computer audio.
update june 2011
Indeed, by now, manufacturers are making streamers like there is no tomorrow. In the meantime, I have reviewed a few computer audio devices, such as the Ayre QB-9, that challenged my beliefs. What's more, I now have a PS Audio PWD Streaming audio client and DAC) that not only betters my best PC solution but actually matches a highend cd player in certain areas.
Incidentally, the PWD illustrates how much a computer actually messes up the musical information. My attempts at getting the best possible music replay from a computer always incorporated using interfaces or programs with a sweet, forgiving nature. Every time I tried some software that attempted to get Windows' conversion processes out of the way, this resulted in a clean but clinical sound. The only exception was circumventing kmix by means of kernel streaming which results in more accurate sound without adding an electronic/digital signature. The introduction of the PWD in my system made for music replay that is much more dynamic and accurate but importantly, still has musical flow, fluidity and colour. Now there's no need to ameliorate digital nasties. Going back to computer audio replay: my belief is that if you want to get musical replay from a computer, you shouldn't chase the most accurate reproduction per se, because that can highlight the flaws of the system all too well, but instead try to find a musical balance.
update december 2011
In the meantime I have reviewed many other computer audio interfaces and various streamers as well. I even have the Linn Klimax DS setup permanently. This streamer is considered by many to be the best there is in hard disk based audio replay. Let's get the word out right now: the Klimax DS, at last, performs on par with what I consider the best in CD replay which is currently the Levinson 390S. Don't get me wrong, the DS doesn't sound the same as the Levinson, but it manages to sound like pure music, emotional, free and room-filling. There's no electronic or digital signature to its sound at all. The PS Audio PWD also sounds utterly un-electronic and certainly doesn't sound like typical computer sound, but it has a persistent lack of resolution in the treble, a certain brittleness and dryness, as well as a lack of extreme treble air that I can't get ironed out, no matter what I try. This makes it sound a little unemotional at times. So, if the PWD makes clear that there is music in hard disk based audio replay, the Klimax DS is the proof that you can equal the best cd players out there, even when judged not only on technical aspects but also emotionally. But I need to stress that streaming doesn't guarantee good results. Equalling or even bettering a 500 euro cd player is entirely possible with even modest streamers. But equalling the best in cd replay can be an expensive excercise. The Levinson was around 10.000 euro. The Linn Klimax DS costs even more. For me, the threshold lies somewhere at 2500-4000 euro, as evidenced by the Ayre QB9 and PS Audio PWD. As always, this is a relative matter, and the outcome is dependent on personal taste, system synergy and lastly, also the budget.