Microsoft sent out a press release announcing a new image compression standard that takes aim directly at the most ubiquitous format on the Internet today - JPEG. The new format, which Microsoft has dubbed HD Photo, supposedly offers higher image quality, smaller file sizes, and significantly more functionality than JPEG:

HD Photo offers compression with up to twice the efficiency of JPEG, with fewer damaging artifacts, resulting in higher-quality images that are one-half the file size. In addition, HD Photo offers increased image fidelity, preserving the entire original image content and enabling higher-quality exposure and color adjustments in the image. This new format offers the ability to decode only the information needed for any resolution or region, or the option to manipulate the image as compressed data.
,br> In addition, HD Photo offers both lossless and lossy image compression, and can retain the full dynamic range and color gamut data from a camera's sensor. Also, because making adjustments to common color balance and exposure settings won't discard or truncate data as other common bitmap formats typically do, it's easier to "undo" those changes at a later time. As a result, significantly smaller files can be created while still retaining optimum picture quality.

Microsoft says it will be submitting the HD Photo file format to an 'appropriate standards organization' shortly. In the meantime, the company has already received support from Adobe, which has helped it develop HD Photo plug-ins for Photoshop CS2 and the upcoming Photoshop CS3. A beta version of the plug-in for Windows XP and Windows Vista is available from Microsoft's Download Center here, and Microsoft says a version of the plug-in for MacOS X is also in the works. Finished plug-ins will be released free of charge in approximately two months.

This new format looks pretty cool. Hopefully it'll be under a non-restrictive license so open source software can use it.

Update: Neowin reader has posted a WDP vs. Standard JPG comparison.