It uses ARM's MP3 encoder and our own ripper. The ripper is about as good as it gets - it can rip damaged CD's that most programs throw up at. The encoder is ARM's optimised Fraunhoffer engine, which a certain empeg developer worked on while he was at ARM. To get a nice unbiased opinion I asked him if it's any good: "Yes it's very good. And it was very expensive."
So there you have it
We don't currently offer VBR encode (playback is no problem), but you can select your CBR bitrate. If you want you can have the player automatically encode a second file at a different bitrate for downloading to portables.
Rob