Panasonic Lumix DMC-LX2

Panasonic could have impressed us just by fixing the faults we found in last year's compact Lumix DMC-LX1. But with its new Lumix DMC-LX2 ($500, street), it delivers a whole lot more. A pocketable alternative to a digital SLR, the 10.2MP LX2 packs a gorgeous 2.8-inch LCD screen with a full 16:9 aspect ratio, loads of controls, improved burst rate, true high-definition video recording, a new image processor, and 16MB of built-in memory. It's even available in black in addition to silver. Best of all: its performance on our Certified Lab Tests -- and its "steal-me" price.

Like its 8.4MP predecessor, the LX2 boasts a 4X Leica DC Vario-Elmarit f/2.8-4.9 optical zoom lens, optical image stabilization, and a true 16:9 aspect ratio sensor that can quickly be switched to 3:2 or 4:3 formats. But the earlier version's disappointing digital noise and image quality at ISO 200 and above, along with an LCD screen that didn't show the entire 16:9 image, dampened our enthusiasm for it.

What a difference this upgrade makes! We ran the LX2 through the Pop Photo Lab, and the results show that Panasonic has made a breakthrough in image quality, thanks to its new Venus Engine III processor and smart noise-reduction technology.

Combined with the excellent resolution from the sensor (which beats most 8MP DSLRs at ISO 100 and 200) and its excellent color accuracy, the LX2 earned an Excellent rating for Image Quality at ISO 100, and Extremely High ratings from ISO 200 up to ISO 800. Its noise levels peak at ISO 200 (Moderately Low) and drop to Low at ISO 400 and ISO 800, rising back to Moderately Low at ISO 1600.

Obviously, noise reduction kicks in at ISO 400 and higher, with a trade-off in resolution -- at ISO 800 the resolution is on par with a 6MP camera, and at ISO 1600, a 5MP. But you get to choose how much resolution to give up by setting NR at High, Standard, or Low. (Our tests were done at Standard.) Want more detail? Dial in less noise reduction. Don't plan to make big prints? Give up some detail, but banish noise with more NR. Frankly, we were impressed by the results at the Standard NR level and can't see a reason why you'd dial in higher NR -- only lower to improve sharpness.

Also, to get the highest color accuracy, we had to turn the default saturation and contrast controls down to their lowest settings (it's easy in the menus).

The flash is a bit weak and limited in range (just over 6 feet) at ISO 100, though it has an extended range at higher ISOs, as well as some useful features. These include a slow-sync mode for low-light shooting (which works well with image stabilization), quick access to flash EV compensation control, and fill-flash capability up to 1/2000 sec shutter speed.
Other gripes: Unusual JPEG compression artifacts at ISO 100 appeared in shadow areas and fine tonalities. They were visible at 100 percent magnification, even when the camera was set to Finest JPEG mode, but were barely there in RAW files converted to TIFF with the powerful Silky-Pix Developer Studio 2.0SE software (supplied). Also, the JPEGs saved in RAW + JPEG mode are highly compressed.