From Brian's piece at AnandTech (with a couple of small corrections by me, in italics):
Nokia laid out the entire optical stack in the open in numerous demos and meetings at their event. The module in the 1020 is big compared even to Nokia’s previous modules. It looks positively gigantic compared to the standard sized commodity modules that come in other phones. The amount of volume that Nokia dedicates to imaging basically tells the story.
One of my big questions when I heard that 41 MP PureView tech was coming to Windows Phone was what the silicon implementation would look like, since essentially no smartphone SoCs out of box support a 41 MP sensor, certainly none of the ones Windows Phone 8 GDR2 currently supports. With the PureView 808, Nokia used a big dedicated ISP made by Broadcom to do processing. On the Lumia 1020, I was surprised to learn there is no similar dedicated ISP (although my understanding is that it was Nokia’s prerogative to include one), instead Nokia uses MSM8960 silicon for ISP. Obviously the MSM8960 is only specced for up to 20 MP camera support, Nokia’s secret sauce is making this silicon support 41 MP and the PureView features (oversampling, subsampling, lossless on the fly zoom) through collaboration with Qualcomm and rewriting the entire imaging stack themselves. I would not be surprised to learn that parts of this revised imaging solution run on Krait or Hexagon DSP inside 8960 to get around the limitations of its ISP. I suspect the Lumia 1020 includes 2 GB of LPDDR2 partly to accommodate processing those 41 MP images as well. Only with the next revision of Windows Phone (GDR3) will the platform get support for MSM8974 which out of box supports up to 55 MP cameras....
...The analogy for the PureView 808 was that it was a 41 MP shooter that took great 5 MP pictures, this remains largely the case with the Lumia 1020 through the use of oversampling. The result is a higher resolution 5 MP image than you’d get out of a 5 MP CMOS with Bayer grid atop it.
By default, the 1020 stores a 5 MP oversampled copy and a full 34 (16:9) or 38 (4:3) MP image with the full field of view. Inside Windows Phone and Pro Cam (Nokia’s camera app) the two look like one image until one zooms in, and of course there’s the ability to of course change this to just store the 5 MP image.
Just like with the PureView 808 there’s also lossless zoom, which steps through progressively smaller subsampled crops of the image sensor until you reach a 1:1 5MP 3x center crop in stills, or 720p 6x crop in video (1080p is 4x). This works just like it did on the PureView 808 with a two finger zoom gesture.
...For a full walkthrough of the camera UI and features, I'd encourage you to take a look at the video I shot of Juha Alakarhu going through it, who presented on stage. I also took another video earlier in the day walking through some of it myself. It's really the only way to get an appreciation for how fluid the interface is and how much better it is than the stock WP8 camera app.
Although I wasn’t allowed to pull images from the Lumia 1020 for later review, what I did see on-device was impressive. I think it’s fair to say that once again Nokia has set basically set the bar for the rest of the smartphone imaging world – in terms of both hardware and software features. It's a step forwards from the PureView 808, and from the Lumia 920 / 925 / 928. Of course, the ultimate question is whether consumers are going to appreciate all of it and be willing to pay the premium for the Lumia 1020 over the Lumia 925 / 928 or another smartphone entirely. Although imaging quality is a big emphasis for smartphone shoppers, it isn’t the only one, and the Windows Phone 8 pill is still a big one for me and many others to swallow.
So, despite not really being a Windows Phone fan, Brian remains cautiously optimistic about the 1020. Early image samples across the net from the device have provoked some criticism for not being as detailed as similar images from the Nokia 808, but since no production 1020s have yet been made and since the firmware isn't final yet, I think it's too early to judge.
With the custom ISP, the larger sensor and the more powerful Xenon flash, the older Nokia 808 may well still be able to hold its own, but we certainly shouldn't discount the Lumia 1020's BSI sensor, the improved optics, the OIS and that clever 'dual capture' system. Not to mention the superb new camera interface and integrated editing facilities, for both stills and video.
Watch this space for our review coverage when the 1020 becomes available in Europe.