Meet the new king of phone cameras: The 41-megapixel Nokia Lumia 1020, arriving July 26 on AT&T

Phone or camera? Nokia just made the line a lot more blurry. The company today took the wraps off the Nokia Lumia 1020, a new Windows Phone 8 flagship that packs a whopping 41-megapixel sensor, a pixel count that puts even most DSLRs in the dust and sets a new benchmark for smartphone photography.

The best news: you won’t have long to wait to get your hands on it. The phone—which comes in yellow, white, and black—will initially debut at AT&T for $299.99 with a two-year contract. AT&T kicks off online preorders on July 16. The phone, which runs on the carrier’s 4G LTE network, officially goes on sale July 26. China and select European countries should get it later in the year, Nokia said.

The Lumia 1020, said Nokia CEO Stephen Elop, was designed to “firmly establish Nokia as the leader in mobile imaging.”

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I’d say they did that and more. The Lumia 1020 also comes with a built-in app called Nokia Pro Camera that’s designed to take advantage of the phone’s record-setting image sensor and make it easy for anybody to shoot, edit, and share pro-quality photos and video. Pros can also use it to manually adjust flash, focus, ISO, shutter speed, white balance, exposure, and other key settings.

Another neat trick: the Lumia 1020 actually creates two images every time you press the camera button in Nokia Pro Camera—a super high-res version for editing and archiving, and an oversampled 5-megapixel copy for easy sharing via email or social networks such as Twitter and Facebook. (For more on the Nokia Pro Camera app and Lumia 1020, don’t miss my interview today with Nokia’s Kevin Shields and Windows Phone’s Joe Belfiore.)

Record-setting sensor

Camera buffs will certainly geek out on the sensor specs: Featuring a maximum 7712 x 5360 resolution, it’s the largest backside illuminated image sensor of its kind in any smartphone and a generation beyond the one Nokia included in its 808 model released last year. The sensor sits behind a sandwich of six Carl Zeiss lenses, which combined with the camera’s optical image stabilization technology, help deliver super-sharp photos even in low light. There’s a xenon flash for stills, an LED flash for video, and a 1.2 megapixel wide-angle front-facing camera for HD chats.

The Lumia 1020 records HD video in 1080p at 30 frames per second and lets you zoom in up to four times closer to the action with no loss of quality (up to 6x closer in HD 720p). It also has a technology called Nokia Rich Recording, which handles sound pressure levels six times louder than conventional smartphone microphones. The upshot? Movies that will look and sound amazing on a home theater system.

The phone itself sports a 4.5-inch AMOLED display (1280 x 768 pixels, 15:9 aspect ratio) made with Gorilla Glass 3, 1.5 GHz dual-core Snapdragon processor, 2000 mAh battery, 2 GB RAM, and 32 GB internal memory.

A wave of new apps—plus Vine, Path, Flipboard

The new phone is also likely to unleash a new wave of advanced photo and imaging apps, thanks to a new Nokia imaging software development kit released today that gives programmers access to the phone’s groundbreaking camera technology. Nokia said Yelp, CNN, Vyclone, and others are already working on new apps that take advantage of it. At the New York press event, Hipstamatic demoed Oggl PRO, a Lumia 1020 exclusive that lets you set manual focus and exposure, reframe shots, and more.

Nokia also announced that the popular apps Vine, Path, and Flipboard will soon be available on Windows Phone.

And watch out for cool new accessories, too. Nokia today unveiled the Nokia Camera Grip, a multipurpose accessory that helps further blur the line between smartphones and high-end cameras. Expected to go on sale this month, it features an ergonomic, bumped-out grip on the side like DSLRs have, a universal tripod mount, and extra battery power. Price tag: $79.

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Head over to the Nokia Conversations Blog or the company’s website for more coverage of this groundbreaking new device.