I have heard rumors that LokSound is indeed working on a smaller sound decoder. Not sure of the accuracy of these, but it makes sense: CT Elektronik (Austria) has a smaller sound decoder (the SL76, 16.7 x 7.7 x 2.3 mm), and they compete with LokSound in their home European market. It makes sense that ESU would want to have a competitive product. The new non-sound micro decoder is about the same size as the Zimo MX621; CT makes an even smaller decoder (The DCX76). The fact that ESU is trying to downsize the LokPilot micro to compete with Zimo and CT indicates that the rumors of a smaller sound decoder probably are true. The Atlas board shows that this is possible; it's a bit under 8.5mm wide; it's long, but a lot of that length is just to make it fit the available space for mounting purposes. The actual decoder electronics probably could fit in 20-25mm.
The likelihood of a narrower LokSound is why I've put a moratorium on any further hood-diesel installs. Cab units aren't a problem because of their width, and steam locos are a cinch (well, maybe not the Atlas Shay or 4-4-0, but easy in the tender of the 2-8-0 or Kato Mike). I do wish Matt would spend some time updating LokSound's "generic" steam files. The file for the N&W 2-8-8-2, the SP cab forward and the UP Big Boy (which I also use for my Challenger and probably will one day put in my EM-1's) are excellent. The "steam collection" files could use an update; they aren't bad, but the chuff sounds in particular are better on the Soundtraxx Econami, which also has a configurable "open cocks" sound at startup that ESU lacks in these steam collection files.
Actually, what I really wish for is a sound file based on the NKP 765. At one point Matt had expressed some interest in recording the 765; it would make a great "superpower" dual-cylinder steam file. Maybe he could record Mike 587, too!
John C.