August 30, 2007 7:00 AM PDT

Panasonic broadens SLR ambitions with L10

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Panasonic entered the SLR camera fray in 2006, but plans to introduce a second model with more mainstream appeal Thursday.

The Lumix DMC-L10 is a 10.1-megapixel model that costs about $1,300, including a 14-50mm, f/3.8-5.6 image-stabilized lens co-developed with Leica. The camera, announced on the heels of rivals such as Nikon's D300 and Canon's EOS 40D, scheduled to go on sale in October.

The L10 includes some features standard on the newest SLRs such as a sensor-shaking dust removal system and live view to compose pictures on its 2.5-inch LCD, but unlike them, the screen can flip out and pivot.

Panasonic's L1 was jointly designed with longtime camera and lens specialist Leica. In contrast, "the L10 has a lot more Panasonic DNA in it," and future SLRs will head farther down that path, said Richard Campbell, vice president of imaging in Panasonic's marketing group.

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And the company expects broader adoption for the new model: "The L1 was more of a technology story for us," said Alex Fried, the company's national marketing manager, indicating that the company perceived part of the earlier camera's role to be in effect a demo model.

But Panasonic faces challenges in the SLR market, fast growing but crowded with new competition as electronics companies Sony, Panasonic and Samsung have joined traditional camera makers Pentax, Nikon, Olympus and Canon. Panasonic has a technology partnership with Olympus, but that cuts both ways, said Steve Hoffenberg, a camera analyst at Lyra Research.

"Panasonic is in kind of an awkward position" as it tries to stand out from Olympus, Hoffenberg said. "They have a bit more of a challenge getting the Panasonic name to be accepted by the serious photographers. They could end up in a position where they'll have to use price as a differentiator, but out of all the manufacturers, Olympus has been aggressive on their pricing."

Panasonic has a manufacturing advantage over some rivals though: it builds many components on its own, which makes it easier to design well integrated products and to keep profit margins from being transferred to outside component suppliers. Panasonic makes its own lenses (some in partnership with Leica), sensors, image processors, batteries, LCD screens, memory cards and external flashes.

The company is aiming the product chiefly at people who have only used compact cameras so far and thus don't have an investment in a particular SLR maker's lenses yet. Lenses aren't generally interchangeable among different camera makers, so it's expensive to move from one to another if even a small collection of lenses must be purchased.

Panasonic points to a market analysis to justify its emphasis on compact digital camera owners. Among current SLR owners, only 18 percent owned a film SLR, but a much higher 44 percent have compact digital cameras. Among those who intend to buy a digital SLR, the disparity is even stronger--11 percent to 78 percent.

Digital compact camera familiarity is one reason for Panasonic's emphasis on features such as live view. But it's trying to coax those users into a more sophisticated realm, for example by offering help screens that let photographers experiment more with basic modes for scenes such as portraits that or landscapes.

The L10 body has image stabilization that can correct for some camera shake by moving the image sensor. In cases where image stabilization also is built into the lens, the camera body overrides the lenses for the task, the company said.

The L10's sensor, like that of almost all digital SLRs, is smaller than a full frame of 35mm film--17.3x13mm rather than 36x24mm. That means lenses behave differently, with a narrower field of view for a given focal length. Panasonic's resulting "crop factor" is 2.0, so the included 14-50mm lens behaves more like a 28-100mm lens on a traditional film SLR.

Also different from the traditional film world is the sensor's aspect ratio, or width-to-height proportion. Panasonic employs the Four Thirds system developed by Olympus, which has a 4:3 aspect ratio like a traditional TV screen; film and most digital SLRs have a wider 3:2 ratio, and HDTV and Panasonic's compact cameras employ an even wider 16:9 ratio.

The Four Thirds system describes not just the shape and size of the sensor, but also the details of the mount for the interchangeable lenses. Olympus and Panasonic camera bodies can share lenses from the other company or from Sigma, a third-party manufacturer. Through this cooperative effort, there are more than 30 lenses available for Four Thirds cameras, Panasonic said.

Having to support only the smaller sensor means Four Thirds lenses can be more compact and less costly, Panasonic and Olympus argue. "A benefit of Four Thirds is the ability to provide large zoom lenses in a smaller form factor," Campbell said.

Panasonic released an $850 14-50mm f/2.8-3.5 Leica lens with the L1 in 2006 and an $800 25mm f/1.4 later that year. Coming in October will be a $700 14-50mm f/3.5-5.8 lens--one that doesn't handle dim conditions or fast-moving subjects as well as the earlier model but that's smaller and less expensive--and in November, a $1,300 14-150mm f/3.5-5.6.

The latter lens is geared for the hot superzoom spot in the lens market. Five of the 20 top-selling lenses of 2006 were superzooms, and the No. 2 seller was Nikon's 18-200mm. Like the other Panasonic lenses, it's jointly developed with Leica and built by Panasonic in its Yamagata facility in Japan, Campbell said.

It will be expanding that lens range further. "We're fully intent on blowing out our lens portfolio," Campbell said. Having a wide array of lenses is an important part of fulfilling the promise of SLR cameras.

Of Panasonic's overall SLR plans, the company wouldn't be pinned down. "You're going to see a lot more things happening with us with SLRs in the future," Campbell said.

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