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This program is part of Netpbm.
pnmquant reads a PNM image as input. It chooses ncolors colors to best represent the image, maps the existing colors to the new ones, and writes a PNM image as output.
This program is simply a combination of pnmcolormap and pnmremap, where the colors of the input are remapped using a color map which is generated from the colors in that same input. The options have the same meaning as in those programs. See their documentation to understand pnmquant.
It is much faster to call pnmcolormap and pnmremap directly than to run pnmquant. You save the overhead of the Perl interpreter and creating two extra processes. pnmquant is just a convenience.
Here is an example of the relationship between the programs:
$ pnmquant 256 myimage.pnm >/tmp/colormap.pnm >myimage256.pnm
does essentially this:
$ pnmcolormap 256 myimage.pnm >/tmp/colormap.pnm $ pnmremap -mapfile=/tmp/colormap.pnm myimage.pnm >myimage256.pnm
pnmquant did not exist before Netpbm 9.21 (January 2001). Before that, ppmquant did the same thing, but only on PPM images. ppmquant continues to exist, but is only a front end (for name compatibility) to pnmquant.