Matt Drance offers one hypothesis for why Google is dropping H.264 support:
If H.264 becomes and remains the dominant codec, then Google needs to convince all of its partners to bundle H.264 decoder hardware in order to preserve a competitive video experience on Android. It cannot, however, guarantee them favorable licensing terms, because it is not a licensor in the H.264 patent pool. Android and Google could end up with a problem on their hands if OEMs hesitate or get hit with lawsuits.
Enter WebM/VP8. By overseeing both the technology and policy, Google has much more power to insulate its partners, and thus the entire Android platform, from disruptive patent or license disputes. If all goes well, it could go a step further and require Android OEMs to include VP8 decoder hardware from a (hand-picked, of course) list of vendors, guaranteeing a minimum standard of video playback on all Android devices. Google could even acquire one or more of these vendors for good measure.
Why dump H.264 entirely? Why not hedge your bets, especially if H.264 is working right now? Google says “our goal is to enable open innovation;” what it in fact means is “we prefer patents we own.”
Another theory on Google’s dropping H.264
Horace Dediu has another theory on why Google is dropping support for the H.264 video codec:
Don’t miss the interesting comparison to Apple’s decision to go with the PowerPC over Intel processors back in the day.
I’m sort of obsessed with this decision by Google not because of its effect on me personally, but because I’m curious as to how companies come to these kinds of decisions. It’s complex and fascinating.