The Apple TV community is eagerly awaiting the software update that will allow the Apple TV to play Youtube videos in a few weeks.

But there was one detail that didn't make sense. According to Apple, only some clips were going to be made available immediately, with the rest to follow. Apple predicted all the clips would be available by fall. But what is there to convert? Why isn't everything available at one time?

Because Apple convinced YouTube to support their favored format, H.264. And it takes time to convert YouTube's entire library.

This move has huge implications. First, there's no explanation of what YouTube gets out of the deal. The benefit to Apple is clear - Apple gets its Apple TV working with YouTube, potentially at a better resolution and quality. But what's the benefit to YouTube?

Second, what does this mean for the iPhone? The iPhone cannot currently play Flash content, but it can play H.264. This opens the door for Youtube content on the iPhone.

Third, this is yet another big blow for Microsoft and its technologies. Whether you use a MS-powered cell phone or a Media Center PC, this custom version of YouTube (presumably with higher quality) won't work with your device.

YouTube is owned by Google, and Google is currently very friendly with Apple. If two of Microsoft's most troublesome competitors can stay allied, it's going to cause a lot of headaches in Redmond.