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Nearly all digital cameras use one of two types of sensor: either a CCD (charge-coupled device) or CMOS (complimentary metal-oxide semiconductor).
In the early years of digital cameras, CCD sensors had a clear edge in image quality, and were the overwhelming choice of camera manufacturers. CMOS sensors, though less expensive to manufacture, simply couldn't match the picture quality of CCD's. That's because they were prone to "noise" - digital artifacts that marred the picture.
However, advances in the quality of CMOS images have outpaced decreases in the cost of manufacturing CCD's. And CMOS sensors use just a fraction of the power required for CCD's, resulting in longer battery life in your camera.
Today, most manufacturers use CMOS senors in their higher-end cameras, while most point-and-shoot cameras have CCD sensors. But in terms of image quality, for most snapshooters, there's not enough difference to worry about.
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You said: "Today, most manufacturers use CMOS senors in their higher-end cameras, while most point-and-shoot cameras have CCD sensors". This is counter-intuitive as CCD is more expensive and has better quality than CMOS. Is there a typo here or am I missing something?