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will choosing one over the other as my index page affect my search engine rankings? which format does Google/yahoo prefer? Thanks.
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The reason for the htm extension is that Microsoft needed to make file names conform to the old 8.3 naming convention: eight characters for the name and three characters for the extension. This convention was carried over from early versions of MS-DOS, which copied it from a still earlier operating system called CP/M.
As far as picking which version to use, I’d say go with html. Since Microsoft added long file name support (over ten years ago), I doubt there are any servers out there that require htm.
Practically speaking, there is no difference between the two extensions. Both denote that the file contains HTML. This is really a matter of convention and is not an absolute, but most realize that a file whose extension is htm or html contains HTML.
On most, if not all, servers either file will be sent with a MIME type of text/html by default. This can usually be changed by the server’s administrator(s), but is, more often then not, left alone.
On most, if not all, browsers, either file will be displayed as intended (i.e. rendered according to the browser’s default manner of displaying HTML documents). This last is due more to the MIME type sent by the server then by the file’s extension, but that’s a matter for another FAQ.
Generally, the use of htm over html, or vice versa, is left to the author’s personal preferences.