A couple of years ago I was given a free Mediterranean cruise by my sister (she works for a cruise company) and because I knew I'd take a shedload of pictures, I finally made the step of upgrading from my trusty (and fabulous) Canon Eos film to a 400D, because I wanted to be able to take the same kind of pictures I'd take with my SLR, but with the convenient storage of my digital compact (which was an extremely cheap one that took poor-quality pictures).
I didn't get the whole RAW/Jpeg thing at the time, having only just bought the camera, and I didn't want to be experimenting on my once-in-a-lifetime holiday pictures, so although I stuck mainly with manual settings, I had it set to record them as Jpegs.
On the lovely island of Mykonos I took some pictures of the famous Mykonos windmills. It's a lovely picture - but when I tried to print out a nice big version of it, I found that the camera had made some truly appalling decisions in the processing, which didn't show in a normal 7x5 print. The white balance is only slightly off, and isn't too bad, I can live with that, but in the sharpening process it's given me a lovely fringe around the fins of the windmills that make it look like a very bad 1980s blue-screen special effect. That's something that I would've been able to avoid in the processing, but it's something that can't be undone.
While I know I could spend the best part of a day whittling away with Photoshop to get rid of the fringe around the windmill fins, I've got better things to do with my time.
The main problem, in my opinion, with letting the camera make all the processing decisions is that they can't be easily undone. Now, I know that they're terribly clever, and that in many, if not most cases, DSLRs make sensible decisions when they process an image to Jpeg, and on some models you can influence those decisions, but if it does anything that you don't like, it's really hard to undo it. With RAW, you make the decisions after you've taken the picture, and if you don't like them, you haven't affected the initial image.
Russ.
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I shoot Canon, and use Elinchrom lights.
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