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Cell phones have killed the small sensor camera market. In fact the entire camera market is down like 30% last year. Mirrorless is making in-roads everywhere except US and EU (though I shoot mostly mirror less, A7 and GH3).
The cell phone will always be limited by the quality of the lens and the size of the sensor. There is no substitute for horsepower for certain tasks (printing large, cropping heavily, low light). But for typical users and typical uses, the newer cell phone cams are quite good. Hence compact cams going by the wayside.
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