I saw in another thread that the reason why they didn't implement the SACD function was the cost of licensing to Sony.
If the ERC-1 selling cost was fixed at $399 and the cost for the license + SACD compatible drive would prevent that, that would make sense.
Perhaps Emotiva felt that not enough people cared about SACD otherwise they could have just added it to their manufacturing cost and priced it accordingly.
In all probability you are both correct. Lonnie said that the ERC-1 could easily support SACD, but that Sony was unwilling to negotiate a reasonable Licensing Agreement. Undoubtedly, the low demand for SACD from the user base figured into their decision matrix. Sony is famous for letting its intellectual property die on the vine because they were unwilling to negotiate their Licensing fee structures.
Betamax was the better tehnology, but due to Sony's stubborn streak VHS dominated the market. There are many examples of this sort , including SACD, where they had the best technology and let it die over its unwillingness to negotiate reasonable fees. What a shame...