Introduction

With the absolute explosion of entry-level DSLR sales in the past five years—a boom driven by the advent of the sub-$1000 DSLR—the market no longer turns on the whims of professional and news photographers. For anyone who makes a living from the pictures they take, lugging around a DSLR is a more palatable nuisance. If you're just looking for good quality images, why wouldn't you opt for a smaller camera, all else being equal?

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The Performance Gap Myth

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"All else being equal" is really the key phrase in this discussion. Given the fact that these compact system cameras (CSC) generally use smaller image sensors to achieve that "compact" moniker, how can they equal their larger DSLR counterparts?

That lost sensor area has, until now, yielded a pretty large performance gap between cameras such as Micro Four Thirds and Nikon "1 system" bodies and the full-sized DSLRs. While cameras like the Olympus E-P1 and Panasonic GF1 wowed enthusiasts with superb color accuracy and plenty of manual control, they struggled mightily in anything but bright lighting conditions. In our testing back in 2009, the Olympus E-P1 returned images that had an abysmal noise total of 7.7% at ISO 6400 (anything over 3% is fairly poor), essentially rendering the camera useless in low light without a tripod. Digital noise ruins images, plain and simple.

These compact sensors have taken time to develop, seeing as there are fewer cameras that make use of them (and thus, less companies to fund their development) compared to the larger APS-C sensors found in entry and mid-level DSLRs. This year's Panasonic G3 (full in-depth review can be found here), however, shows that these cameras are not necessarily playing catchup in low light anymore, but are actually outperforming some DSLRs.

In testing the Panasonic G3 this spring, we found its new 16-megapixel Micro Four Thirds sensor yielded just 2.42% noise at ISO 6400 and 3.39 stops of clean dynamic range with noise reduction turned to its lowest level. Compare that to the Canon Rebel T3i DSLR, which we reviewed this past spring, finding it had 3.1% noise and 2.48 stops of dynamic range in those same tests at ISO 6400. Here are some examples from all three cameras:

As you can see in the crops above, the Micro Four Thirds Panasonic G3 has closed the gap considerably. Last year's Sony NEX-5 did even better, as Sony's system employs a full APS-C sensor, though still eschews the viewfinder/reflex mirror combo to produce one of the smallest CSCs on the market. While DSLRs also have the advantage of speedy phase detection autofocus, the new AF systems on the Olympus E-P3 and Nikon J1 were as fast as just about any entry-level DSLR we've seen. The message is clear: with more development and even better third-party lens options, there's no reason a CSC can't perform just as well as a full-bodied DSLR.

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The Market Response

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So where do things head from here? We can't predict the market, but it's already been reported by Amateur Photographer that compact system cameras made up almost a quarter of interchangeable lens camera sales in the UK in this past December and January, before the G3 and E-P3 were even announced.

We'd wager that trend will only continue this year and into the future. While entry-level DSLRs aren't going anywhere, the compact system camera may simply be a better option for many people, especially those who are used to the simplicity of using point-and-shoot cameras.

Compact system cameras are not as travel-friendly as a smartphone, but they offer substantially better image quality and, with a few exceptions, take up substantially less space than a DSLR and lenses. That may change as even smaller image sensors develop in the years to come, but it is nearly impossible to fit DSLR-quality optics into a lens that will realistically accompany a smartphone.

Judging from our performance tests this year, as well as the pleasing fluidity of the shooting experience provided by cameras like the Olympus E-P3 and Nikon J1, we can confidently say that those needing a camera smaller than a DSLR may just find what they're looking for in a compact system camera. While mid-level and professional DSLRs still have little competition for quality, it's time to realign our perception of the compact system camera and its relative performance to similarly-priced DSLRs.

To read more about the Panasonic G3 and its new sensor, our full in-depth review is here. To see a weighted list of our top interchangeable lens cameras and where the G3, Olympus E-P3, and Olympus E-P1 rank, please visit here.

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