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What are the key differences between the two?

How does it affect cost, the image viewed through the viewfinder, and stabiliz quality?

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One significant difference that a lot of people miss is the degree of stabilization possible with each system. As we all learned with the 1/focal length rule for minimum handheld shutter speed (Tv), lenses with longer focal lengths are more prone to blur because it takes much less movement to induce the same amount of blur than when using a wide angle lens.

Lens based Image Stabilization allows the system to be optimized for the focal length of the lens, and many telephoto lenses with IS can compensate for up to four stops with focal lengths in the 200-800mm range. This is the focal length range where it is needed most.

Camera based Image stabilization is dependent upon the speed and distance the sensor can be moved and is most effective with wider angle lenses. The servos needed to move the sensor fast and far enough to compensate for up to four stops with a lens in the 300mm+ range do not exist in a form factor that would fit in a typical DSLR body.

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