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I'm pretty certain there's a conspiracy. You want a pod thing, but no - need USB 2. So you have to buy a upgrade. Or, as in my case, you have to buy a whole new PC. It doesn't seem that long ago that things lasted and just worked - no complex compatability issues.
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You can usually get a PCI card with USB2 sockets on reasonably cheaply these days. I don't know whether the iPod will just not function on USB1, or whether it will just complain but work slowly.
Last time I know someone tried plugging in their iPod to a computer that has USB1 they kept on getting messages on screen saying that they needed Hi-Speed USB or something similar.
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Don't know if they've recognised the existence of mp3s yet .. they try to make you use their ATRAC format
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ATRAC is the proprietary compression scheme they use on Minidiscs. I believe the Minidisc was a Sony invention, but they've obviously licensed the technology out to other companies to make Minidisc products - i.e. Denon.
I suppose they feel that it's in some way superior to other compression technologies such as MP4 (AAC) and MP3. Betamax, anyone?