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From the reviews, the oversampling technique employed by the Pureview 808 seems to work really well, making good use of the 41 MP sensor to create saner resolution images of higher quality. I was wondering why this technique has not been employed in full fledged cameras, especially the Point & Shoot models, as they would have lesser constraints in terms of size than a phone. The Pureview 808 of course uses the large sensor for both zooming and for picture quality depending on which is required, while a P&S can have a zoom lens.

Is this due to feasibility or practical constraints or just commercial decisions?

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Not an answer because I don't really know - but I suspect sensors of high enough resolution for this to be practical are fairly new and the technique just may not have it other markets yet. –  rfusca Jun 26 '12 at 18:48
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In point-and-shoots, you can usually choose if you want to store images at full sensor resolution, or downsampled ones - look for "image resolution" in settings. Some point-and-shoots, like my old FZ30, will do the zooming trick too.

Pixel binning used in PureView does have an advantage over simple downsampling with very low light levels, where charges can be first added in chip and then read noise applies to the stronger signal of combined values. The technique requires abundance of pixels (they are combined into groups of some power of 2, reducing output resolution by the same number of times) and some extra circuitry for the binning; so far this has been available on some scientific digital microscopes and PhaseOne P65+. Binned pixels allow using shorter shutter times at same sensitivity level, as you don't have to wait for each small pixel to gather sufficient light.

As to why the sensor resolutions have not been so high - have to agree with @rfusca here, producing them in an economic way is fairly new. Tuning the amplifiers to boost ISO levels with less noise has been the center of attention and what low-light ability has been measured by.

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Yes, practically all cameras including smartphone ones do have the ability to save lower resolution images, but do they employ the same technique as in the Pureview 808? Also, in such cases, would the lower resolution images be of better quality than the full resolution ones? –  ab.aditya Jun 27 '12 at 4:25
    
The technique is to calculate a new pixel from several (smaller) pixels; yes, that's how other cameras rescale into smaller size images, and you can always do it yourself in post processing. Similar reduction of noise and aliasing can be observed. The difference is that reduced resolution output is not their default setting. –  Imre Jun 27 '12 at 4:51
    
This sensor does pixel binning rather than just software downsampling, so it has a noise advantage over cameras which don't do that and over simple downsampling in software. –  mattdm Jun 27 '12 at 12:07
    
After reading more about pixel binning it does seem to be a unique advantage, happening in chip before pixel values are subject to read noise. Edited accordingly. –  Imre Jun 27 '12 at 14:15
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They do. It occurs any time you set the camera to a lower resolution. They also use it for zooming too sometimes. It goes by names like Enhanced Zoom, Smart Zoom, Fine Zoom, etc.

Fuji has its own variant which works extremely well and has been a huge selling point among its compact cameras. They call it EXR technology. It uses oversampling to produce low-noise images by combining adjacent pixels which have the same color due to t he special EXR color-filter-array. It can also sample pairs of pixels to expand the captured dynamic-range.

You can see the difference between 16 MP (High-Resolution) and 8 MP (Low-Noise) mode at all ISO in my Fuji F550 EXR review. The difference is pretty clear even starting at base ISO. If you use these Fujis as 8 MP cameras, you get some really high quality output for a compact.

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The difference is not so clear any more when rescaling one of the crops so that they would correspond to equal full image resolution. After that, it only looks like High-Resolution images receive a bit more aggressive noise reduction, so what Low-Noise mode gives in detail it takes away in even surfaces. E.g. the window pane in Low-Noise crops is noisier than in High-Res when scaled to same size. –  Imre Jun 28 '12 at 6:10
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Thats a great point actually! A computer can scale down with more sophisticated and time-consuming algorithms. So if you pixel-bin (aka scale-down) on a computer you can get better results than in the camera. –  Itai Jun 28 '12 at 12:26
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