I've been reviewing hardware and software, devising testing methodology and handed out buying advice for what seems like forever; I'm currently absorbed by computers and gaming hardware, but previously spent many years concentrating on cameras. I've also volunteered with a cat rescue for over 15 years doing adoptions, designing marketing materials, managing volunteers and, of course, photographing cats.
The highest clean ISO sensitivity the XZ-1 produces is really ISO 100; ISO 200 is still quite usable, but you can start to see some noise suppression artifacts. By ISO 400, details begin to smear. Processing raw can help somewhat, but I was unable to produce an artifact-free version of an ISO 400 shot.
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Noise, raw vs. JPEG
At midrange ISO sensitivities you can get cleaner shots, but the tradeoff is some lost detail.
(1/30 sec, f2.2, ESP metering, AWB, ISO 800, 28mm equivalent)
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Low-light white balance
The XZ-1's white balance in low light (mixed incandescent and halogen here) is unusually warm.
(1/30 sec, f2.2, ESP metering, AWB, ISO 800, 28mm equivalent)
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Sharpness
In its default settings, Olympus applies a little too much sharpening to its JPEGs. While it doesn't look too bad here, in more natural shots it adds a bit of crunchiness. Also, note the fringing on the highlights.
(1/50 sec, f21.8, ESP metering, AWB, ISO 100, 28mm equivalent)
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Sharpness, raw vs. JPEG
As you can see, there's a huge detail difference between shooting JPEG and raw.
(1/200 sec, f3.5, spot metering, AWB, ISO 100, 41mm equivalent)
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Color and dynamic range, saturated reds
The camera's generally cool white balance shifts the hue in this red a bit (a common problem with digital cameras). While there's some loss of detail in the brightest areas, the camera does a reasonable job.
(1/125 sec, f2.2, spot metering, AWB, ISO 100, 65mm equivalent)
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Color
Overall, the camera renders reasonably accurate colors; they're certainly saturated.
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Distortion
At its widest angle of view, 28mm-equivalent, the XZ-1's lens shows a little barrel distortion. But it's symmetrical (and therefore easier to correct) and not bad for a fixed lens.