1) In communications engineering, the term codec is used in reference to integrated circuits, or chips that perform data conversion. In this context, the term is an acronym for "coder/decoder." This type of codec combines analog-to-digital conversion and digital-to-analog conversion functions in a single chip. In personal and business computing applications, the most common use for such a device is in a modem.
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2) The term codec is also an acronym that stands for "compression/decompression." A codec is an algorithm, or specialized computer program, that reduces the number of bytes consumed by large files and programs.
In order to minimize the amount of storage space required for a complicated file, such as a video, compression is used. Compression works by eliminating redundancies in data. Compression can be done for any kind of file, including text, programs, images, audio, video, and virtual reality (VR). Compression can reduce the size of a file by a factor of 100 or more in some cases. For example, a 15-megabyte video might be reduced to 150 kilobytes. The uncompressed file would be far too large to download from the Web in a reasonable length of time, but the compressed file could usually be downloaded in a few seconds. For viewing, a decompression algorithm, which "undoes" the compression, would have to be used.
There are numerous standard codec schemes. Some are used mainly to minimize file transfer time, and are employed on the Internet. Others are intended to maximize the data that can be stored in a given amount of disk space, or on a CD-ROM.
Codecs are used in many popular Internet products, including QuickTime, Netmeeting, Cu-Seeme, and VDOphone.