Invented by: S3
1st use: Savage3D - 1998
Mainstream use: 1999+ - with releasing DX7 GPU chips
Used for: increasing texture size
Replaced by: 3Dc
S3 used on its 1st real working (ViRGE had many image errors) and fast 3D accelerator Savage3D new technology of texture compression called S3 Texture Compression (S3TC). It allowed using textures of sizes upto 2048x2048 pixels even on Savage3D with only 8MB of memory without loosing speed. Compared to standard texture size 256x256, it was great enhancement even through texture compression wasn't lossless (compression ratio is 6:1 or 4:1). Technology was presented on famous custom Egypt themed level in game Unreal using company's own API called MeTal. Later was also presented on demo maps for Quake II using OpenGL API - you can see them here. Savage3D and later Savage4 was not so succesfull and this technology had no support from developers in games. That changed, when Microsoft buyed licence from S3 and used it in DirectX version 6 named as DirectX Texture Compression (DXTC). 1st famous game with native support was Quake 3 and many later games based on its engine.
Nvidia supports DirectX Texture Compression since releasing GeForce 256 card (1999). I'm not sure about ATi support, but its probably since Radeon (Rage 128 chips have no support, Radeon 9000 have support). 3Dfx is supporting DXTC on Voodoo 4 and 5 cards. FourCC Code of original S3 Texture Compression is S3TC, DirectX Texture Compression have codes DXT1, DXT2, DXT3, DXT4, DXT5.