Canon definitely needs something in this space. IMHO it is already a mistake that they do not have something out there. For a specific example I currently have a 5D2 and a 7D but still wanted a compact camera that is easier to carry around. Our current compact was a G11 but we recently replaced it with the X10. The X10 is a great little camera that the G11/G12 really can't compete against. It certainly does not have the high ISO of the 5D2 or the AF of the 7D but it does a very nice job for what it is. I recently took it to DisneyWorld - leaving my 5D2 + 7D behind - and it did a very nice job even in low light.
Personally, if one of my friends were to ask me for a camera recommendation and I knew they weren't interested in getting into photography - just taking pictures of their friends and trips - I wouldn't hesitate to recommend the X10 over a Rebel + kit lens.
I do not intend to replace my Canon SLR equipment (have a 1D-X on order) with a small camera - even an interchangeable lens one with a better viewfinder + high ISO, but a lot of Canon's business comes from the lower end of the market and they are quickly losing there.
Personally, if one of my friends were to ask me for a camera recommendation and I knew they weren't interested in getting into photography - just taking pictures of their friends and trips - I wouldn't hesitate to recommend the X10 over a Rebel + kit lens.
I do not intend to replace my Canon SLR equipment (have a 1D-X on order) with a small camera - even an interchangeable lens one with a better viewfinder + high ISO, but a lot of Canon's business comes from the lower end of the market and they are quickly losing there.
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