Even at $350, wouldn't one of the premium P&S from Sony/Pany/Oly/Canon etc. be a better option, since they would have a retracting lens and be truly pocketable?

I mean that sensor is tiny. Surely the picture quality is no better than the P&S equivalents.

I bought one of these for my wife (previous Amazon deal) after looking for a deal on a S90/95/100.

For what she is shooting, mostly snapshots of family, the camera and fixed 50mm FoV has worked very well. It is thicker than the S100, but still very small. She takes it out of the house more than she did her E-PL3 as it will fit easily in her smallest purse.

The sensor is small, but I think with the backlighting, it is within striking distance of a S100, especially at low ISOs. The f1.9 lens is good wide open, with a ton of DoF of course, and seems to help keep the camera down in reasonable ISO range indoors.

Overall, though, I do think this is more about the novelty... a tiny, and extremely well-built, camera with decent IQ. Given the amount of the discounting, assume Pentax is going in another direction. I hope they come out with something similar... but with a fixed 50mm equiv. lens, to keep the size down, and a larger sensor.

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Kyle / E-M5 and E-PM2
Flickr Photostream

The RX100 is in another ballpark. Having owned a S100 and a LX5 I would rather have this. Now at $350, it's even cheaper.

But see, you can't strap a 500mm f4.5, 9 pound lens on those premium P&S now can you? That's true pocketabliltyness.