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The image quality from the E50 is disappointing to say the least. Most of the problem is with the lens/sensor combination, which fails to reach decent sharpness. It's okay at short range but add any length to the focus and the camera is very hit and miss. Not only does the autofocus not always lock onto the target, the images just don't have decent sharpness when it does.
The lens also suffers from barrel distortion, which is expected, at the wide end and fringing is evident, especially at the image edges.
Exposure is acceptable for the most part, but it doesn't respond well to anything slightly tricky, such as dark or light subjects. Even reducing exposure for a darker subject failed to make much difference and this was hindered by poor screen evealution of the exposure thanks to its poor sunlight performance.
Colour is generally good though, with slightly more saturation and a warmth to the images rather than neutrality, but for consumer cameras this is usually a good thing, producing punchy and bright images. The tonal range is about average for a camera at this price, that is, okay if a little overly contrasty.
Noise is the biggest problem, especially if you're hoping to use the camera in low light, or rely on the digital shake reduction. ISO 1600 is frankly appalling, and little better than a mobile phone though anything under ISO 400 is acceptable, with ISO 100 turning in the best results for the camera.
For the price and it's market the Pentax E50 does it's job, but it's hardly the best camera on the market, even for £100. The poor LCD monitor and lack of features are obviously cost cutters, but the 8million pixel CCD sensor and lens really should be better. Yes you'll be able to take reasonable pictures, but no better than those of a 5 or 6 million pixel camera. It's best feature is is simplicity, so if you want something for the non-techy person in your life, the E50 might fit the bill.
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