NEW YORK ( TheStreet) -- Good photographers -- or those who aspire to be better -- have a new term to learn: Micro Four Thirds.

Camera and optics heavyweights from Sony ( SNE) to Canon ( CAJ) to Nikon -- and to a lesser extent Eastman Kodak ( EK) -- saw that the old world of film would be replaced with digital image sensors, smart lenses that focus themselves and still cameras that take digital video. So a new market was born. Now it seems everyone has a digital camera, either a bulky-but-powerful DSLR (digital single lens reflex) model or a smaller, point-and-shoot unit with limited features.

The camera industry is moving to fill that gap with a new format called Micro Four Thirds. The original Four Thirds format was a standard Kodak and Olympus dreamed up several years back with limited success to try to get a leg up on market leaders Canon and Nikon. The Micro Four Thirds is the same idea, but smaller.

Courtside with the E-P1

Micro Four Thirds cameras have interchangeable lenses, plenty of image-processing features and powerful autofocus in a package that fits in your hand. I recently tested Olympus's E-P1 ($799 with 14-42 mm lens), the company's premier effort in this format, at the U.S. Open.

What you get: This stylish camera takes stylish pictures.

The E-P1 is a throwback to the Leica M series from the 1950s with its fabulous optics and bombproof construction. Its metal alloy body and size is reminiscent of the Kodak Instamatic.

It has an impressive dust reduction system and a durable lens-mounting structure that supports a wide variety of modern DSLR lenses and formats. At the match between teen star Melanie Oudin and No. 4 Elena Dementieva, I shot photos with a sports-ready 300-millimeter zoom lens from the roof of the tennis facility. While I don't recommend this unwieldy setup, the E-P1 worked surprisingly well.

When it comes to technology, the E-P1 doesn't disappoint. It comes with a 12.3 million-megapixel optical sensor that works with 12-bit lossless RAW files (the standard pros use) and the compressed format, JPEG. It has an impressive motion-stabilization system, high-speed range finders and autofocus, art filters and tons of other bells and whistles. The E-P1 can do just about anything you would want to do with a photo.

I was also impressed by its video capabilities. While it's far from professional, the E-P1 cranks out decent high-definition video with surprisingly good sound quality. Even better, its micro HDMI output let me see my clips of Oudin pretty much as I shot them.

What you don't get: The camera's high price doesn't buy you the best quality and features.

The E-P1 is small and versatile, but it costs $799. That's lot of dough for a camera. J&R, for example, offers a fully outfitted Canon EOS Rebel for $750 on its Web site. That's all the camera you would ever need. E-P1 buyers are paying for the cool factor.

Also, if you get fussy with the E-P1, you will find its limits. The autofocus was too easy to confuse at long range. Olympus's photo processing features, called art filters, work well enough, but they're no substitute for Adobe's ( ADBE) Photoshop. And mastering all the functions is tricky. It was possible to push a shot two stops in 4-by-3 format, but it took plenty of tinkering.

And the Zuiko lenses included weren't my favorites. My courtside images of Dementieva were far from precise. I still give Canon the nod for optical quality.

Bottom line: The E-P1 will probably be the camera of the moment. It's innovative, looks cool and succeeds in combining DSLR functionality with point-and-shoot convenience.

If you can afford to buy the E-P1 and use it as a point-and-shoot, you won't be disappointed. But if you're concerned about cost or need specific features, this unit might not be for you. There are just too many great cameras at this price.

-- Reported by Jonathan Blum in New York.
Jonathan Blum is an independent technology writer and analyst living in Westchester, N.Y. He has written for The Associated Press and Popular Science and appeared on FoxNews and The WB.