spdif out for portable DAPs

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It looks to me like recent generations of ipods are capable of s/pdif output bypassing the built-in DAC with the use of external docks (Wadia and Onkyo are available and a few other docks are coming).

I own a portable dac/amp, so I would really appreciate a mobile solution that could make my ipod to output spdif. I am shure a few people would love to use some kind of the "digital LOD" for an ipod.

I have only found the following unreliable info related to ipod's ability to output digital: it requires Apple chip to "decode" (?!) and additional chips to convert I2S(?) to S/PDIF

Questions:
1. Is the "spdif LOD" possible?
2. Anyone interested in designing it?
3. What would be the cost of producing it?
 
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