Looking into the Crystal Ball: The Future of Open-Standard Internet Video

Complete Media Systems’ Smith added an interesting international perspective about Windows Media versus H.264. "12 months ago, many telcos told us they were planning to use Windows Media; now that H.264 is out on the market, the situation has dramatically flipped," Smith said. "Almost 90% of the international telcos, ISPs and cable companies we talk to now say ‘we want H.264.’ I think they were looking at Windows Media a year ago because it was the best on the market, but now that an open standard (H.264) is available with DVD quality at 1.5Mbps, telcos now have a way to obtain good quality at low data rates but not be beholden to Microsoft."

Signes added his thoughts: "Chipset manufacturers like ST and Sigma are now putting out a significant number of decode chipsets designed for set-top boxes that have MPEG-4 or H.264; they can’t put out VC1 chipsets because it’s not finalized." He also went on to state that "100% of new video phones coming out have QCIF H.264, so the consumer space seems to be moving to H.264, but the market for desktop streaming media is still wide open."

On2’s McIntyre disagreed, saying that product manufacturers, especially for tools like instant messaging, are afraid to move completely away from Windows Media. When questioned on the fact that Apple’s iChat AV uses H.264 for its new 4-port video instant messaging, McIntyre dismissed the Mac, joking that "out of 250 million users, I only know two that use Macs."

Moderator Sorenson countered that Apple’s dominance in the creative space could strengthen H.264’s position, since Apple’s QT Broadcaster and Final Cut Pro and DVD Studio Pro provide on-demand, progressive download and live streaming of H.264. Smith added that his sense was that Microsoft’s change in strategy, allowing H.264 under Microsoft’s DRM scheme, could signal a sea change. "The question becomes whether Microsoft will be willing to risk owning the DRM market—especially the portable DRM market—versus trying to own the whole encoding, transmission, and delivery chain."

"I think it’s very un-Microsoft to give up anything," McIntyre countered. "I view this just like the Godzilla movies where the fighter jets appear to have killed Godzilla, but he rises again to dominate. Note that Texas Instruments’ digital signal processor (DSP) group is focusing on WindowsMedia as the ‘top of the heap’ solution, while H.264 is much less of a priority at TI. That should tell you something."