The heart of the camera is a silicon chip made with the standard technology used in computers and consumer products, rather than the more complex and expensive devices in camcorders.
The development could lead to 'smart vision' - miniature computers which can think about what they see. According to Stewart Smith, marketing manager for VLSI Vision, the company set up with finance from the Scottish Development Agency and venture capital from Edinburgh to make the 'Peach', one application would be industrial quality control.
'In a food factory they could check to see if a biscuit is there, or if it is broken. Or you could imagine electronic security systems which recognise people's faces.'
The chip at the heart of the 'Peach' was developed by Professor Peter Denyer and colleagues in Edinburgh University's electrical engineering department.
In sharp contrast to the usual picture of British inventors being good at ideas but failing to turn them into products, they expect to market many tens of thousands of chips over the next year.
The bulk price is about pounds 18 for the chip and pounds 54 for the camera.
Mr Smith says the market for chips and cameras includes low resolution closed-circuit television, domestic security and surveillance, and video entry phones.
The main advantages of the 'Peach' are its cheapness, small size and low power consumption - about one tenth that of a conventional camera; a battery-powered 'Peach' could last 30 hours rather than 3.
But for the time being, it seems unlikely that domestic or professional camcorders will shrink to the size of a 50p piece. Mr Smith said: 'We are not suggesting that it will replace the camcorder, although the technology could undoubtedly be stretched to this market in the longer term.'Reuse content