Sony has unveiled its smallest digital still camera to date and has taken its first steps into the booming market for low-cost, low-price models.

The DSC-U10 easily fits in the palm of your hand. It measures 8.5cmx4cmx2.9cm and is also light on your pocket, weighing 118g (with batteries, Memory Stick and wrist strap) or about the same as one of today's mobile phones.

Of course, the light weight and small size doesn't come without a cost. In terms of features, the camera doesn't measure up to other models in Sony's range.

It has a 1.3 million pixel CCD (charge coupled device) pickup which is capable of a maximum resolution of 1,280x960 pixels. This is around one-half to one-third the resolution of other cameras the company makes, and the movie model is limited to 15 seconds of Mpeg-1 images (with no sound) at 160 x 112 pixel resolution.

However, the camera is not trying to compete with those higher-end models but instead is aimed at beating a growing number of 1Mp (megapixel) class cameras launched in recent months by other manufacturers.

"The target market for the cameras is young people and women," said Sony spokeswoman Mami Imada. "There are many people who do not already own a digital still camera and we want this to appeal to them. The target is also people who already have a higher specification camera but who want a second camera that they can easily carry around in the pocket or keep in their bag."

Some of these potential users are currently using cameras embedded in their mobile phones, however the quality of those devices is much lower, at between 100,000 and 300,000 pixels.

The camera, which is available in silver, blue or pink, will go on sale in Japan 20 July and carries a price tag of around ¥25,000 (£136.485). Sony plans to put it on sale overseas although has yet to decide on timing for international markets.