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Wyner-Ziv (WZ) coding has recently been proposed as a low encoding complexity alternative to traditional DPCM coding for compression of sources with memory, in particular, in applications like multimedia compression. The viability of this alternative approach clearly depends on the compression performance of WZ coding compared to that of DPCM coding. In an attempt to understand the performance gap between WZ coding and DPCM coding, this paper studies the operational rate-distortion performance of WZ coding, using uniform scalar quantization followed by perfect Slepian-Wolf coding, for compression of a Laplace-Markov (LM) source. It is shown that at low rates or for weakly correlated LM sources, WZ coding is indeed a competitive alternative to DPCM coding. However, at high rates the performance gap becomes non-negligible for strongly correlated LM sources. In order to reduce the gap at high rates, a hybrid approach that combines DPCM coding and WZ coding is further investigated. It is shown that the hybrid approach is indeed competitive to DPCM coding at all rates even for strongly correlated LM sources.