Fraunhofer IIS, best known for its MP3 music format, claims the HD-AAC format will make CDs obsolete:
HD-AAC is based on the MPEG-4 SLS (Scalable to Lossless) standard, an extension to the MPEG-4 audio standard jointly developed by Fraunhofer and Infocomm Research. The encoding process HD-AAC preserves every bit of information in the uncompressed original music track, providing lossless compression of 24-bit music content. That's compared to the 16-bit, 44.1 kHz quality found on CDs -- hence, Fraunhofer's "better than CD" claim.
The HD-AAC encoding process embeds a core layer that can be played on existing music players and mobile phones that support the standard AAC format, such as Apple's iPod and the iPhone. The fully lossless signal will be available for playback in future devices that feature an HD-AAC decoder, according to the company. HD-AAC files can also be streamed to multiple devices at varying bitrates to help maximize the sound quality under varying network conditions.