This is last (I think) in a series of ponderings:
The recent introduction of 1" sensors has been both a bang (Sony RX100) and a "meh" (Nikon 1 series) in the world camerascenti. Sony is clearly on a roll with their sensors, as the one in the RX100 is a peach. The 28mm f1.8 at the wide end adds to the charm, and pushes the compact point-and-shoot deep into entry-level DSLR and mid-level Micro Four-Thirds territory in terms of both price and image quality. The Internet is filled with gushing praise for the achievement of this camera. Putting a comparatively large sensor in a point-and-shoot body is something that has never been done before the RX100 (at least in our digital age), and people were rightly chuffed at the image quality they could stuff in their pocket. Like any camera, it has its flaws–the lens is slow on the long end, controls are more consumer electronics than camera, etc...–but Sony really caught Panasonic (LX7), Olympus (XZ-2), Canon (G15), and Nikon (P7something or other) off guard. Each, undoubtedly was too far into their product development cycle to change course, so they released the cameras that they had in the pipeline. And pity poor Pentax, just entering the fray with the brassy MX-1, only to find that the party's moved on. It will be interesting to see how the serious compact segment evolves from here, but it's a fair bet that more next generation cameras will be sporting the 1" sensor. That's not to say that the smaller sensor compacts don't have a place; I am enjoying the LX7 immensely, especially at it's lower price point–I thank the Sony RX100 for that. And the smaller sensor of the LX7 enables Panasonic to fit a really fast lens (24-90mm f1.4-2.3 EQ) in a small package; that's likely the reason the sensor in the LX7 is smaller than the sensor in the LX5. Panasonic's not the only one betting on smaller sensors; Pentax has stated publicly that they are fully committed to the tiny Q.
But the Nikon 1...ah the Nikon 1. Loved by few, but a disappointment to many. Many pre-judged the cameras on the basis of its sensor size alone (I posit now that megapickle war has been replaced by the sensor size war and that one of these days we'll all come to our senses, but I digress), and no amount of FPS or AF performance was going to sway hearts and minds. The enthusiast model V1 was a bit of a camel (i.e, a horse designed by committee), with key features like the PASM oddly missing from a camera in the dSLR price range. I wrote more about this issue with the camera here. Only later, as the camera landed in the hands of a few early adopters did some realize that hidden behind some of the poor marketing and poorer expectations was a pretty decent camera. Not excellent, not great, but not bad at all. But by that point our collective attention had been shifted away from the 1 series to the next flavor of the month, and the initial disappointment lingered like a bad hangover.
Recent sales data is suggesting that mirrorless camera sales are flattening while DSLRs continue to hum along quite steadily. My theory is that up until now mirrorless sales have been driven primarily by people adding a mirrorless camera to their DSLR kit. Some become so enamored with the size advantage that they abandon their DSLRs altogether. But that market is limited. Despite budget cameras like the Olympus EP-M and Panasonic GF, entry-level DSLRs continue to sell well for two reasons. One, they offer performance and value at a pricepoint that mirrorless still struggles with. And two, a soccer mom can stand on the sideline and rattle off five frames per second with an entry-level DSLR in P-mode and get some sharp photos. They can't do that with a mirrorless camera...until the Nikon 1.
That's the biggest achievement of the Nikon 1–fast continuous AF performance in good light–and it may very well be the killer app. Olympus and Panasonic have made progress with AF lately, but I'd still be wary of recommending a Micro Four-Thirds camera to soccer moms and dads. And while the latest Sony NEXes have PDAF embedded in the sensor, word on the street is that it's not nearly as quick as the Nikons.
So of all the mirrorless systems, the Nikon 1 series is best poised to attack the vast bulwark of entry-level DSLRs. The image quality isn't outstanding but it's good enough. It's not considerably smaller than similar Micro Four-Thirds cameras but it is considerably smaller than a DSLR; it's a difference that you can see and feel at Best Buy. And it's got a name that non camera enthusiasts know and admire. The remaining issues are low light AF and price. If Nikon can address those issues, it will be game, set, match. Until then, that's the main case against 1" sensors.