The inherent limitation of stereo is that it provides directional information only over a frontal soundstage limited in practice to about 60 degrees. In seeking to expand the audio market, several companies had the idea of extending directional information to all around the listener. This is defined as surround sound. Two channels already provide two parameters which can be used for encoding direction, namely relative amplitude and relative phase. Although in principle both altitude and azimuth angles could be encoded, subsidiary requirements confine two-channel surround systems in practice to horizontal surround only.
Ambisonic encoding is of course easily provided synthetically by ambisonic pan-pots, etc.
Based on the theory of sampling on the surface of a sphere, the principle of the SFM has proved so good in overcoming earlier limitations that further development of capsule technology has been needed to exploit it to the full. The task of the decoder is to feed to the loudspeakers of the eventual listener such feeds as will radiate into the room sounds which cooperatively give the listener correct directional clues. Since these feeds must be adapted to the size and shape of the loudspeaker layout including the number of loudspeakers used, they cannot have existed at any earlier point in the chain. The human ear-brain system uses a number of mechanisms for locating sound, the nature of which needs to be understood for optimum design. The essential key lies in the physics of diffraction of soundwaves at the human head, and the conditions this imposed on the types of information available to the ear.