About ten years apart Olympus introduced two mighty compacts, that the world should have paid attention to: first the mighty C-8080, with magnesium body, an articulated display, a high-resolution EVF, a superb grip, and a lot of other goodies. But sales were disappointing, the camera was expensive to manufacture, and the technical wonder had rotten RAW performance (two shots a minute!), and was absolutely rotten if you tried any kind of backlighting!
The XZ-1, on the other hand, succeded in every way where the the C-8080 failed: Excellent low light performance (the usuable top ISO for the C-8080 was 160!), excellent viewfinder (an expensive extra, worth every nickel), small and fairly compact. The C-8080, on the other hand is a fairly massive design, bigger than some DSLRs, but not that heavy! In the macro part of the spectrum they are about equal, maybe the C-8080 wins it in the long run. The xD cards and the CFs are fairly slow in a C-8080 (due to slow processing), while the XZ-1 is fairly snappy!