Is image stabilization neccessary in a compact digital camera?

Is an image stabilization feature (be it optical or electronic) needed in a compact digital camera?

It really depends on the zoom range of the camera. In the old 35mm film days, there was a rule of thumb that you needed a shutter speed of 1/focal length to safely hand hold a camera without undue risk of camera shake giving blurry photos. So if you were using a moderately wide angle lens, say 35mm focal length, you would need a shutter speed of 1/35 or faster. This is quite a low speed and is easily achievable in moderate light. If you were using a telephoto of 200mm, the minimum shutter speed would be 1/200 and this is starting to need quite bright sunlight.

A good optical image stabiliser (OIS) can buy you 2 to 3 stops (note that electronic stabilisation is far inferior). In simple terms, this means in the telephoto example above you could get away with a shutter speed of something like 1/30.

If you have a small camera with a 3x zoom, these usually have the 35mm equivalent of a 35-105mm focal length. An OIS would be useful, but is not essential, provided you hold the camera properly in two hands. However, some digital cameras zoom out to the equivalent of 400mm+. It is almost impossible to obtain sharp handheld pictures with these focal lengths without OIS.

I have a Panasonic FZ7 with OIS and can obtain sharp handheld shots at 1/6 at the wide end (36mm eq) and 1/20 at maximum telephoto (432mm eq) with about a 70-80% success ratio.

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