WebP is a new image format recently introduced by Google. WebP is said to reduce the image size still maintaining greater quality. The compression ratio is also user adjustable so that you can adjust the balance between size and quality.
A WebP file consists of VP8 image data, and a container based on RIFF. WebP uses predictive coding to encode an image, the same methodology used by the VP8 video codec to compress keyframes in videos. Predictive coding uses the values in neighboring blocks of pixels to predict the values in a block, and then encodes only the difference between the actual values and the prediction. The residuals typically contain many zero values, which can be compressed much more effectively. The residuals are then transformed, quantized and entropy-coded as usual. WebP also uses variable block sizes.
So why bother about it? The web would be dull without images, but they take more time to load. We don't like waiting! Do we? As WebP is lighter, we can use the WebP format to create smaller, better looking images that can help make the web faster.
As it is a new format, no browsers or image viewers are capable of viewing WebP images right now. But soon a patch to Webkit will be available which will enable Google Chrome to view WebP images. I'm quite excited about it, but again, many browsers should have support for it to view, specally, Microsoft's Internet Explorer.
You can checkout the WebP Homepage or download the converter here.