The Olympus XZ-2 is visibly a descendant of the XZ-1, but big changes have been made to the new model's design. First of all, grip has improved thanks to the arrival of a new handle (which is removable!) and a rubber thumb-pad on the back of the camera. There's also a tilt screen, making it easier to line up shots at waist height or over the top of an obstacle. Finally, two Fn buttons have appeared—Fn1 for fast access to the setting of your choice and Fn2 for access to the Quick menu, where you can change various settings with the lens ring.
And there's more good news, as Olympus has packed this camera with loads of great custom options. So as well as assigning the settings of your choice to the Fn1 button and picking the options you want to access in the Fn2 menu, you can also re-assign the functions of the lens ring and the notched settings wheel (around the four-way arrows) mode by mode, including playback mode. The lens ring can be set to function notched or smooth (see inset) and dial direction can be customised too!
The screen is a new 920,000-dot LCD, replacing the OLED used in the XZ-1. While the onscreen image is cooler, it's also more evenly balanced—light greys are still a little too white but the distribution of grey levels is more even. Colour fidelity has improved (OLED screens are almost always over-saturated) and is now within average for a camera screen. Contrast has dropped a little as a result, but the brightness level remains similar. Plus, the fact that the screen can be tilted will help you avoid reflections and glare, ultimately improved readability.
The Stylus XZ-1 was already on the better side of average in this field, and the XZ-2 does a good job too. It starts up in a pretty speedy 1.5 seconds, photo-to-photo turnaround is fast and the autofocus is fine (it's neither slow nor fast).
The 5.3 fps burst mode is decent too. It's even available in RAW mode but only for three frames—the camera then continues at 1 fps.
The XZ-1 had an excellent lens twinned with a relatively bog-standard CCD sensor. Logically, then, the XZ-2 keeps the XZ-1's lens but the sensor has been upgraded to a BSI CMOS. In theory, we should see some pretty good results here.
The ISO test results from the XZ-2 are a world apart from those of the XZ-1. The XZ-1 smoothed pretty heavily from 800 ISO upwards, and digital noise took an unpleasant purple tint at 1600 ISO. You get none of that with the XZ-2. Shots at 800 ISO are impeccable and you could still feasibly use 1600 ISO shots, even though some soothing is visible in finer details. Beyond that, things get a bit more tricky, but speckles of digital noise aren't that much of a problem as they aren't too crazily coloured. Obviously, quality is nowhere near a match for the excellent Sony RX100, but among expert compacts with small-format sensors, the XZ-2 certainly holds its own. We'd place it just slightly behind the Canon G15 but ahead of the Samsung EX2F, and it gives a generally more natural-looking result than the Panasonic LX7.
At wide-angle, this Olympus lens performs well. The centre of the frame isn't quite as sharp as with Panasonic's LX7 but quality stays consistent over the frame. Even the corners of the shot hold up well—although, at 100% size, there's a slight fringe of chromatic aberration. At telephoto, the XZ-2 is the expert compact that's gets closest in quality to the LX7, wrangling its way past the Nikon P7700.
Note too that Olympus takes a different approach to image processing in this expert compact, setting itself apart from current trends in the market. While chromatic aberration isn't totally eliminated, this camera is particularly resistant to moiré effects and generally does a better job than its competitors when picking out fine lines.
Finally, the automatic white balance has a special "Warm" option in the internal menu, so you to keep a very neutral image (left) or opt for a generally warmer picture while still benefiting from an automatically adjusted white balance. The effect is obviously particularly visible under incandescent lighting and makes for a good compromise between neutrality and atmospheric-looking shots with no need to use manual white balance controls.
The video mode was a bit of a let-down in the XZ-1 (like all other expert compacts of the time). Thankfully, Olympus has updated things in the XZ-2, bringing Full HD video at 30 fps (H.264 encoding). The image is pleasant, sharp, nicely exposed and free from digital noise.
Audio quality is on the better side of average, with distinct noises reproduced well and a nice stereo effect. The only problem is that when you zoom, the system designed to mask the noise of the lens motor ends up muffling the overall soundtrack quite heavily.