Sony this morning turned around its focus on traditional camcorders to competing against very small cameras such as Sanyo's Xacti line. The AVCHD-based Handycam TG1 is less than five inches tall, 2.5 inches deep, and weighs 10 ounces but is still capable of capturing a 1920x1080 picture. This makes it the smallest HD-capable camera yet, Sony says. While much of this size reduction comes from recording to Memory Stick Pro Duo cards, a 2.7-inch touchscreen offloads many of the controls that would otherwise occupy space on the main body.

In addition to its HD video capture, the Handycam also takes 4-megapixel photos and has a 10X zoom useful for composing either motion or still shots. The BIONZ processor is borrowed from Sony's higher-end cameras and sports an automatic dynamic range compensation feature that reduces the likelihood of blown highlights or overly dark shadows. Sony will offer the camera for $900 in May but notes that it ships the camera with a high-speed 4GB Memory Stick Pro Duo Mark 2 card, supplying users with enough memory to start recording immediately.