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Also said to be featured in the new phone is speech recognition GPS technology, as well as HD video, which is becoming popular with some DSLR cameras.

So what sort of impact will this have on the compact market, especially as technologies are getting smarter, and more high-end add-ons become the norm.

Sony Australia, which has a foot in both camps, firmly believes both the phone and camera will exist side-by-side for a long time to come. There are enough differences for one not to over take the other, says Katsu Watanabe, marketing manager of Digital Imaging, Sony Australia.

"We believe both categories [mobile phones and compact cameras] can exist separately, with distinctly different end users," says Watanabe. "For mobile phones, compactness is one of the most important considerations, with the camera functionality secondary to the telephony/messaging requirements. Compact digital cameras, on the other hand, have imaging technologies as the priority, with larger sensors and lenses enabling better picture quality than mobile phones… While advances in technology will enable smaller sensors and lenses to be incorporated into mobile phones in the future, there will continue to be innovation and developments for compact cameras with new functionality and features being introduced."

However, in a year that has seen mobile phones shift up to 8 megapixels, from 5, how long before that line is blurred and people take both the camera and mobile needs into consideration when buying a new phone? If LG can pull off a 10 megapixel camera phone – and as long as the phone keeps its compactness – then the market share of the compact, while it will not disappear, could shrink considerably.