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The Panasonic Lumix DMC-ZR1 has a slim inch-thick body, and offers an effective sensor resolution of twelve megapixels from a 1/2.33" RGB CCD image sensor. Panasonic has coupled the ZR1's sensor to a Leica DC Vario-Elmar branded 8x optical zoom lens which offers focal lengths spanning the range from a generous 25mm-equivalent wide angle to a useful 200mm telephoto. Panasonic states that the ZR1 is the first digital still camera to use an aspheric lens element with a thickness of just 0.3mm, enabling a generous wide angle and zoom range while allowing a pocket-friendly profile when the lens is closed. Importantly, the Panasonic ZR1's lens features a true optical image stabilization system with which to fight blur caused by camera shake. The DMC-ZR1's POWER O.I.S. system is said to offer double the stabilizing power of the company's previous MEGA O.I.S. systems. The minimum focusing distance for the Panasonic DMC-ZR1 is just three centimeters at wide angle or 100 centimerters at telephoto, when the camera is switched to either the Macro or Intelligent Auto mode. The ZR1 has a two-step aperture, which can select between F3.3 and F10.0 at wide angle, or F5.9 and F18.0 at telephoto. There's sadly no optical viewfinder, with the Panasonic ZR1 instead opting solely for a 2.7" LCD display with 230,000 dot resolution on which images and videos are both framed and reviewed.

The Panasonic DMC-ZR1 has an 11-point multi-area autofocus system which also includes a single-point "high speed" focusing mode. As with many digital cameras these days, there's also a face detection function, with Panasonic's implementation capable of detecting up to six faces in a scene and then using the information when calculating both focus and exposure variables. In addition, the ZR1 can be programmed to recognize the faces of three specific individuals for labelling purposes. The Panasonic Lumix ZR1 also has an implementation of autofocus tracking, which can monitor a subject as it moves around the frame, continuing to update autofocus as required. Unusually, the ZR1 has a Travel mode which allows the user to specify a destination as well as the travel dates, with the camera then automatically organizing photos by trip.

ISO sensitivity ordinarily ranges from 80 to 1600, with the ability to extend this as far as ISO 6400 equivalent in High Sensitivity Auto mode. Shutter speeds from 1/2000 to 60 seconds are possible. The Panasonic DMC-ZR1 uses Intelligent Multiple metering, and offers six white balance settings including Auto, Manual, and four fixed presets. A whopping selection of twenty nine scene modes let users tailor the look of their images, useful given that the Panasonic ZR1 doesn't offer aperture-, shutter-priority, or fully manual modes. Among the scene mode choices is a new High Dynamic mode which increases dynamic range and offers three settings - standard, art or black and white. There's also an Intelligent Scene Selection function, which can automatically select from a subset of five commonly used scene modes. A five mode flash strobe includes red-eye reduction capability, and has a rated range of up to 5.3 meters at wide angle, or 2.9 meters at telephoto. The Panasonic DMC-ZR1 also includes the company's Intelligent Exposure and Intelligent ISO functions as seen on past models, plus an updated Intelligent Auto mode which is now linked to the POWER O.I.S. system to correct for camera shake.

As well as JPEG still images, the Panasonic ZR1 can capture 30 frames-per-second movies with monaural sound at resolutions of 1280 x 720 pixels or below, although the compression used is the older QuickTime Motion JPEG type so file sizes are likely to be hefty. Unlike many cameras, the ZR1 does allow use of its optical zoom lens during movie recording. The Panasonic Lumix DMC-ZR1 stores its images and movies on Secure Digital or MultiMediaCards, including the newer SDHC types. There's also a generous 40MB of built-in memory. Connectivity options include a USB 2.0 High-Speed connection, plus standard definition NTSC / PAL and high-definition component video outputs. Power comes from a proprietary Lithium Ion battery pack with ID-Security feature that prevents use of counterfeit or third-party batteries, and is rated as good for 330 shots on a charge to CIPA testing standards. The software bundle includes PHOTOfunSTUDIO v4.0, ArcSoft MediaImpression, and ArcSoft Panorama Maker.

The Panasonic Lumix DMC-ZR1 will ship from September 2009, with expected pricing of $280 or thereabouts.