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When price point, utility, and opportunity come together, I decide what component should exit stage left. It's usually a very easy process.
The urge to upgrade audio components seems endemic to the condition of being an audiophile. Which of the following is usually your main reason for upgrading?
Due to the fact that I have only bookshelf monitors, I'm probably going to get a sub one of these days. As far as upgrading my existing components, I'm not in a big rush. I'm interested in trying different cables or tweaks when I can afford them, but I don't make them a priority. If there is an urge to buy, say, another amplifier, it's either because I want more power or less power (SET). I'm very happy with my current sources, although a new cartridge could enter my life at any time!
I'm the sort of person who decides how much he can afford and buys the best possible components available at the time for the money involved. Upgrading is only when the components become sonically defective/insufficient, or physically break.
Recently, I decided to "downgrade" my old audio system [22 years old amp & pre-amp, 7 years old speakers and cd player], simpley because I found that my taste in music have changed to small jazz ensembles and classical chamber music. I "downgraded" my amp from 100 watts to 30 watts [to a Naim's Nait], and my speakers from three drivers a speaker to two [to Proac Response 1.5]. I also purchased a Naim 3.5 cd player. Now the music sounds more delicate, more focused, more flowing, more like the real thing. I love it. It is going to take a very long time before I ... downgrade it again.
I doubt I will ever be completely satisfied with my system. Even when I upgrade to a new component I know it's still a compromise. I have been in continual upgrade mode for the past 25 years and I believe it only gets worse as time goes on. Of course, I blame it all on Stereophile. ;-)
When the music doesn't sound as dynamic and exciting as it should. I know I'm ready to upgrade. However, last week I bought a cheap TEAC mini micro desktop system at COSTCO, and I actually like the way it sounds over my big rid. Something is wrong with this picture. That Mini system sounds warmer and more musical than my big system. I must have a mismatch of equipment, or my speakers are just not doing it for me lately. For whatever reason, my big system just doesn't give me a great thrill anymore. I now think a good integrated amp will always sound better than a separate amp and pre-amp. Also, you don't have to keep constantly cleaning the interconnects that connect the two pieces together!