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Looking at the specs, both the iPod Touch 5th gen and the iPhone 4 have five megapixel rear facing cameras.

Why, then, is the iPod Touch 5th gen able to record 1080p while the iPhone 4 is only able to record 720p?

Is this a software limitation, or is there something better about the iPod Touch's hardware?

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up vote 2 down vote accepted

Camera sensors are not only limited in their resolution, but also in the rate at which the image data can be read off of them.

Just because a sensor can take 5-megapixel still images doesn't mean that all of that data can be read off the sensor fast enough to record (smooth) video. Even reading just a subset of the pixels (called pixel binning) to reduce the amount of data may not be enough to get 1080p images at, say, 30 frames per second.

A web search indicates that the iPhone 4 uses an Omnivision OV5650 sensor. According to Omnivision's own product sheet for that sensor, it's limited to 720p video, so it's not just a software thing. I couldn't find any specifics about the sensor in the new iPod touch, but it's almost certainly a different one if it records 1080p.

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