Windows 7’s new “play all” decoders, encoders and transcoding capabilities
If you have had any theories Microsoft was conspiring with the media conglomerates to protect their interests and not the user’s, throw them in the bin, pour jet fuel and remotely detonate them since Microsoft can’t be any bolder than building in DivX and Xvid native support in Windows 7. Yes, all your favorite Family Guy episodes will play in Windows Media Player. Yes I’m looking at you. You may have also heard there’s native H.264 and AAC support. But that’s not all. After all, decoding is only one part of the equation.
In a presentation titled “Video Improvements In Windows 7” at WinHEC 2008, Microsoft also revealed new encoding and similarly transcoding capabilities in Windows 7. The new “Media Foundation” decoders are as follows,

In Windows 7, encoding is extended to widely adopted MPEG-4 and 3GPP standards with H.264 video and AAC audio encoders built in, on top of the WMV, WMA and MP3 encoders built-in to Vista today - after all, hardly anyone uses Windows Media outside of the Microsoft ecosystem. Speaking of which the Zune even supports H.264 and AAC natively.

Bear in mind however these encoders are not a replacement for commercial alternatives. The limitations include simple profiles, maximum bitrate and resolutions.
With this new pool of decoders and encoders, Microsoft’s also doing some building in some interesting transcoding (decoding and re-encoding from one format to another) technology in Windows. From what I can at least gather from the presentation, transcoding is actually built right into the Windows 7 shell. That is, if you drag and drop a video from your desktop to your portable media player, the conversion will happen automatically. Personally, anything that removes unnecessary third-party bloatware to add content to portable devices gets my vote.
Microsoft also recognizes that software transcoding is less than ideal - a movie will usually take hours, so Windows 7 will also support a new breed of dedicated hardware transcoders which could ideally become a standard motherboard chipset feature. Here’s a particular one from Quartics.
Written by Long Zheng. Read more great feeds at is source WEBSITE
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