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LG steps up expectations for camera phones with its Viewty, which now boasts native DivX compatibility.

The “camera” in camera phones has long been thought of as a joke among anyone with more serious photographic ambitions, but that might not be the case for long. LG’s KU990 Viewty packs many of the same features found on point-and-shoot cameras into one that’s nestled into a phone, including a 5-megapixel sensor.

Without the dedicated call and end buttons on its back, the Viewty might actually be mistaken for a normal camera, given the way its lens and flash dominate the back side of it. There’s not even a keypad – it’s accessible through a three-inch-wide touch screen that doubles as a viewfinder for camera use. Besides its camera-like form factor and respectable resolution, the Viewty gets manual focus, an image stabilizer, and the ability to recognize handwriting on its LCD screen.

Built-in DivX compatibility, just announced Thursday, also endows the phone with some impressive video features. Native DivX movie files can be transferred to the phone and played back without conversion, and there’s even a TV output for sharing. High-speed HSDPA 3.6 internet access also allows the phone to pull video off the internet from online video communities like Stage6.com and play them live. As a camera, the Viewty doubles as a video camera and can actually capture video at 120 frames per second.

Unfortunately for stateside photo enthusiasts, the Viewty will only appear in Europe when it’s released in mid-October. Though LG does intend to spread the phone to other regions, it hasn’t announced how long that will take, or even given prices for the initial European launch.