11 July 2013 Last updated at 11:43 ET By Leo Kelion Technology reporter Nokia has unveiled a new handset with a 41 megapixel sensor which it claims can record "details never thought possible from a smartphone".
It says consumers will be able to zoom in and reframe their photos without worrying about the image quality suffering.
Analysts who have tested the device said that it was "without doubt" the best smartphone camera on the market.
But they added that was not a guarantee that it would be a bestseller.
Market research firm IDC recently carried out a survey of smartphone owners in 25 countries to identify what factors were most likely to drive future purchases.
The results placed camera resolution 15th on a list of 23 features. Audio quality for voice, battery life, device security and browsing came top of the poll.
"Most people just look at their photos on their smartphone or via a social network on a computer - and for this the other vendors already provide very good quality," Francisco Jeronimo, a mobile phone analyst at the firm, told the BBC.
"Nokia needs to convince consumers that this new handset outperforms others in low-light conditions, otherwise they would only really notice the difference if they zoomed in on the images on a large screen or printed out a poster.
"It may be the best smartphone out there but I doubt it will be enough to convince many users to jump platform from Android or iOS which accounted for 92% of global shipments in the last quarter."
Zoomable video The Lumia 1020 marks the second time Nokia has fitted a 41MP sensor to one of its phones.
Last year it launched the Pureview 808 model, but its appeal was limited by the fact it ran the ageing Symbian operating system for which few developers are still writing software. The new handset instead runs on Microsoft's Windows Phone platform which has more than 160,000 apps.
Continue reading the main story
It may be too soon to sound the death knell for compact digital cameras, but perhaps the writing is on the wall.
Cameras in phones have certainly come a long way from the days of badly-lit, pixelated pictures but still have some fairly hefty limitations.
Not least is the size of their lenses and the ever-concerning matter of battery life.
Compact system cameras, basically much smaller versions of DSLRs (digital single-lens reflex cameras) are also becoming more popular.
So, these two types of device will probably squeeze out the cheaper, lower-end digital cameras at some point in the not-too-distant future.
As well as offering highly detailed photos at up to 38MP resolution, the new phone also uses a process called "oversampling" to combine the pixels of an image into a smaller 5MP version from which it removes unwanted visual noise.
Unlike its predecessor, the Lumia 1020 can save both types at the same time, meaning that the owner does not need to worry about switching settings.
In addition, the handset's video recording capabilities take advantage of the extra resolution, allowing the user to zoom in four times while recording a 1080p high definition video without losing quality, and six times into a 720p version.
It also adds optical image stabilisation by mounting the lens system on ball-bearings and using a gyroscope and motors to counteract any movement to prevent the problem of camera shake.
Please turn on JavaScript. Media requires JavaScript to play.
Stephen Elop, chief executive of Nokia: "We've also made the back the new front"
However, all this comes at a premium price. When it launches in the US it will cost $300 (£198) on top of a two-year contract.
One analyst suggested Nokia wanted the new handset to act as a "halo device", attracting shoppers to other products in its range.
"Nokia is positioning the Lumia 1020 as a flagship product for the next generation of smartphones," said Ben Wood, chief of research at the CCS Insight consultancy.
"Alone it will not transform Nokia's fortunes but the significant media coverage it will generate centred on its innovative camera technology will be a major boost not only to the Lumia brand but also the Windows Phone platform.
"Its high price will undoubtedly come under scrutiny and Nokia must carefully manage this, stressing that it is a flagship product that will likely generate relatively modest volumes."
Android rivals Nokia's boast that its device is perfect for users wanting to "shoot first, zoom later" contrasts with the approach taken by other brands.
Samsung recently unveiled the Galaxy S4 Zoom - a handset with a 10x optical zoom which extends out of the device to allow users to close in on a scene at the time of the snap. This feature is more commonly found in compact cameras than smartphones.
Meanwhile, HTC introduced what it calls an "ultrapixel" sensor to its flagship One model.
Each pixel on its sensor is bigger than normal, a feature that the Taiwanese firm says allows it to offer high-quality low-light shots. But the trade-off is that fewer pixels can be fitted in. As a result its 4MP resolution means image quality deteriorates more quickly if users zoom in on photos to crop the shots.
IDC said Nokia now had the edge.
"For an amateur or professional photographer who needs a quality camera on the move, this is the best option available on a smartphone," said Mr Jeronimo.
"The camera's user interface is a lot more intuitive and easy to use, as well.
"But to be able to compete with Apple and Samsung, Nokia will need to price it aggressively and to increase activities in the stores to show consumers how much better the camera performs against the competition.
"Failing that, the Nokia Lumia 1020 will become a niche product for a niche segment - professional mobile photographers."
Nokia said the device would go on sale on 26 July in the US, and would launch before September in parts of Europe and China.
