DPCM or differential pulse-code modulation is a signal encoder that uses the baseline of PCM but adds some functionalities based on the prediction of the samples of the signal. The input can be an analog signal or a digital signal.
- Option 1: take the values of two consecutive samples; if they are analog samples, quantize them; calculate the difference between the first one and the next; the output is the difference, and it can be further entropy coded.
- Option 2: instead of taking a difference relative to a previous input sample, take the difference relative to the output of a local model of the decoder process; in this option, the difference can be quantized, which allows a good way to incorporate a controlled loss in the encoding.
Applying one of these two processes, short-term redundancy (positive correlation of nearby values) of the signal is eliminated; compression ratios on the order of 2 to 4 can be achieved if differences are subsequently entropy coded, because the entropy of the difference signal is much smaller than that of the original discrete signal treated as independent samples.
Following are the diagrams of the encoder and decoder of the two versions commented:
 Option 1: difference between two consecutive samples
The encoder makes the role of differentiation (the quantizer should precede the difference, unlike shown in the figure), while the decoder serves as an accumulator.
The quantifier (Q) reduces the number of bits while the reverse quantifier (Q − 1) recovers the number of bits of the original initial discrete signal.
 Option 2: Analysis-by-synthesis
Incorporation of the decoder inside the encoder
 See also
- Adaptive DPCM (ADPCM)
- Delta modulation, a special case of DPCM where the differences eQ[n] are represented with 1 bit as ±Δ
- Pulse-code modulation (PCM)
- Pulse modulation methods
- Sigma-delta modulation
- ^ U.S. patent 2605361, C. Chapin Cutler, "Differential Quantization of Communication Signals," filed June 29, 1950, issued July 29, 1952