The Good: Excellent raw photo quality; sharp, bright lens; compact but comfortable design; broad manual shooting feature set. The Bad: JPEG processing should be better. The Bottom Line: Despite its shortcomings, notably its weak JPEG processing, the Panasonic Lumix DMC-LX5 delivers an excellent all-around shooting experience--fastest in its class, full featured, and capable of shooting some very nice photos. Photo gallery: Panasonic Lumix DMC-LX5 Panasonic's Lumix DMC-LX5 delivers a long-awaited update to its relatively old enthusiast compact camera, the LX3. Though it looks much the same and has similar specs, the changes are a definite improvement. They include a new sensor, larger zoom range, improved noise reduction, and a better video codec. Like the rest of the large-sensor compacts, Panasonic sticks with a CCD rather than a CMOS. Though the resolution hasn't changed, Panasonic's latest sensor has slightly larger microlenses arranged to better converge the light and prevent reflections and leakages, plus a larger-volume photodiode, which should (theoretically) improve highlight capture and allow for better response in low light. Plus Panasonic definitely improved its autofocus and start-up performance--branded "Sonic Speed AF"--derived from running more operations in parallel (fixing aperture and checking focus). While the LX5 offers 720p video like the LX3, it's now 30 frames per second (fps) compared with 24fps, and uses a real video codec rather than Motion JPEG. You can also zoom in movie mode now, and use manual exposure modes. Finally, the LX5 can take the same optional electronic viewfinder as the GF1. All of these changes are essential to staying relevant in an admittedly niche market of enthusiasts who aren't so enthusiastic about the new camera darlings, the more expensive interchangeable-lens models. Panasonic Lumix DMC-LX5 photo samples Overall, the image quality is quite good, but frustratingly, the LX5 seems to exhibit the same weaknesses as most of Panasonic's cameras: the in-camera processing and JPEG compression still leave something to be desired. They combine to produce yellow splotches at sensitivities as low as ISO 80 under indoor, living-room level lighting or lower, and there seems to be some oversharpening going on for that undelightfully crunchy look. Interestingly, it looks like the system might be optimized for ISO 200, as that delivers the best results. But processing raw files of the same images, however, allowed for relatively clean and usable images up to ISO 800--I was really happy with the camera's raw quality. There's also improved white balance over the LX3, but oddly, CNET Labs testing showed that the LX5's noise profile improved over the LX3 for ISO 400 and above, but below that it was a tiny bit worse. The color accuracy, even in the default Standard color mode, is very good, though the saturation is pushed a tad farther than I like. Still, the images are quite pleasing. With the exception of Vibrant, which is bad in all cameras, Panasonic's color presets deliver subtly different results without wholesale hue shifts. Exposures look good, and the dynamic range is there to recover a reasonable amount of detail in highlight areas. The new lens seems sharper than the old as well. There's some asymmetrical distortion at the camera's widest 24mm-equivalent, but not a lot given the focal length. If the camera is performing automatic distortion control, then it's built into the raw processing, too; the distortion in the raw and JPEG versions of my test shots, processed using Adobe Camera Raw, were identical. At its best, which means macro distances, the lens delivers nicely sharp photos and there's practically no fringing at any focal length. Video quality looked decent--not notably better or worse than anyone else's--and the sound wasn't quite as good as the S95's. Performance, though, is unquestionably better than the LX3, and fairly good compared with its competitors. It starts up in a fairly zippy 1.6 seconds. Focusing and shooting in good light takes about 0.4 second, upping to 0.8 second in dim light. Nonflash shot-to-shot time is much better than the other cameras we've tested so far: 1.4 and 1.6 seconds for raw and JPEG, respectively, jumping to a not-so-good 4.6 seconds with flash. Continuous-shooting frame rate outpaces its class, but at 2.6fps it's still hit or miss. It delivers better battery life than the others as well.