This is correct but this is only one element. With regards to those asking or frowning upon the sound quality of the iPhone or iPod, here is some further info:
Firstly, they can both be improved with better ear or headphones, they are by no means the worse player on the market and they are not too bad at all, but I admit they are not the bet but most of us wouldn't notice.
Secondly, when connecting via MMI, its line level and bypasses some of the circuitry used by headphones which helps with the sound quality so there will be some improvement.
Thirdly, BT bypasses both the audio line level and the headphone built in amplification so again will be different and improved.
With regard to bit rates, MP3's are not a "lostless" audio compression format so to keep the file size down the compression algorithm clips the top and bottom of the audio track plus other clever stuff, less voice and less bass essentially. To prevent this happening rip or down load your audio files at 320KBs or the highest you can get, this will minimise the "clipping" and keep the quality, this is the best for SD cards. The best format to use is Apple lostless when using Apple hardware which is the native format and gives full lostless copies. There is a down size, the higher the bit rate the larger the file.
I am an audio enthusiast, I have over the years spent more on audio equipment for the home than I have on my current car, the audio within a car is flawed but I use some simple rules when using compressed audio, keep the bit rate high and/or use a lostless file type. I enjoy a pretty good sound in my RS with the B&O system, I spec'd B&O to get the best possible sound. I have a 160GB iPod which is full so I have a very good selection of Audio and the iPod and iPhone coupled with the B&O amplification works well. This would also sound different with Bose and basic Audi amplification.
