I’ve been banging on about this for a while, internally, not for public consumption. I wonder how close Cringely is to the truth:

I reported more than a year ago and repeated in this year’s predictions that Apple would be adding H.264 hardware support to its entire line of computers. The chip they are adding comes from NTT in Japan and was developed in cooperation with Japanese broadcaster NHK. The chips began sampling a year ago and should now be available in volume, though Apple may be paying as much as $50 each for early production.

This would be a major blow to gross margins because, unlike all the speculation covered above, this wouldn’t be a matter of replacing one chip with another but of adding a new chip to the mix. That’ll be an extra $50, thank you, with no savings from eliminating other parts.

The fun part is figuring how this all fits into Apple’s strategy as not just a maker of computers but also as a seller and distributor of entertainment content.

The NTT chip is not just an H.264 decoder, it encodes, too, which is what makes it so special. The last I heard NHK was claiming the chip could compress a 1080p video and audio stream into four megabits per second, down from the 20 megabits normally required. If we assume Apple will apply the same kind of wink-wink, nudge-nudge transcoding to 1080p that they’ve already applied to 720p in the Apple TV, then it is within reason to expect they’ll claim to distribute 1080p over iTunes in two megabits per second.

As the dominant technology platform in television and movies today, it makes good sense for Apple to put this H.264 hardware capability into the Mac Pro line, and maybe even into the MacBook Pros for professional use, but darned if I can immediately see why such powerful and expensive compression capability is required in a MacBook, iMac, or Mac Mini, yet I was told long ago that the chips would be applied “across the entire line.” We’ll see.

From the super-cheap seats out here in the hinters, NTT will be cutting their own throats by granting an exclusive license to Apple for an H.264 codec chip. I think I know Apple didn’t put any significant engineering $$$ into this. I think I also know it won’t be six months before knock-off H.264 codecs are available. That’s the China effect. But I also think I know that NTT can absorb the exclusive license to highly-specialized chipsets, and there’s the Apple/Jobs halo effect to consider.

Personally, I don’t think HD is that big a mover, yet. My eyes are old and tired. But there’s a generation growing up that only knows HD.

An-t-way — fun geeky video stuff. I need to cogitate on this. H.264 is pretty big, in all three legs of the bug — compute, store, transmit. I simply can’t imagine it being limited, chipset-wise, to a pretty small subset of users. But I never thought the entire music industry would go back to 1994 web graphics, and they did.