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In this paper, we motivate JPEG2000 at length for digital still cameras by highlighting new usage models. These models show how JPEG2000's new features will make digital photography more convenient and practical for handheld applications than JPEG. Some of the major challenges associated with developing cost-effective, high-performance systems are identified. We propose a new block-based approach for wavelet decomposition that reduces memory requirements, enables processing concurrency and efficiency, and promotes coexistence with JPEG.