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My understanding is that the GP-E2 will work on the Canon 7D as long as it has the new firmware and connects via USB. Does this mean that it does not need to be on the hotshoe and I can use a flash unit without a cord? If so, what is the best way to hold the GPS unit close to the camera?

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The EOS 5D Mark III and EOS 7D require a firmware upgrade to be compatible with the GPS Receiver GP-E2, which will be available soon

To my understanding you can in fact use the GPS unit separately or on the hotshoe. When you use it separately you have to connect it to the camera via usb.

As for holding it close to the camera I recommend that pocket protector shirt in your closet!

Or you could get a hotshoe bracket like the AB-E1. Good luck!

EDIT:

I should also note the limitations for the 7D

When the EOS 7D is used with the GP-E2 the following restrictions will apply: a) geotagging function will not work for movies while recording; b) geotagging features will not work for movies when using the Map Utility; c) electronic compass information and automatic time setting is not available; d) transmission via the hot shoe is not possible.

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