(1) (enCOder/DECoder) A hardware circuit that performs analog-to-digital conversion (ADC) and digital-to-analog (DAC) conversion. When analog signals are entered into a computer, cellphone or other device via a microphone or video source such as VHS tape or analog TV, an ADC creates the raw digital audio or video samples. Quite often, the results are then further compressed to save bandwidth (see definition #2).

(2) (enCOder/DECoder or COmpressor/DECompressor) Software or hardware that compresses and decompresses audio and video data streams. The purpose of this type of codec is to reduce the size of digital audio samples and video frames in order to speed up transmission and save storage space.

The goal of codec designers is to maintain audio and video quality while compressing the binary data further. Lossy methods are widely used, which actually discard bits that most people cannot hear or see. The algorithms may be implemented entirely in software, in which case the PC does all of the processing. In handheld devices, the codecs are chips.

Codecs Are Specialized
Speech codecs are specialized audio codecs that look for voice patterns and characteristics. Since the human voice falls into a much more limited audio range than music, a speech codec is able to compress voice conversations even further. For a list of popular codecs, see codec examples. See companding, codec switching and lossy compression.

(3) (COmpressor-DECompressor) A general data compression algorithm; for example, a "Zip codec." The term may also be applied to the built-in algorithms used to create and render images such as GIFs and JPEGs. See data compression.