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All photos my wife or myself take in low light levels has a white blurr that appears on the right side after the camera flashes, the image is without this problem until it is taken. Is this a problem with the software or a hardware flaw with the camera/flash proximity to each other and the chrome rim around the lens.this is on both our z1 phones my wife has a white one and I a black one. The red inference on the left side is not common just bad lighting. When I say the right side it would be on the bottom side for portrait photos
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Well, me and my friends were testing this phone and out of 20 people 2 had this problem i was one of them 
... we all had same model of black xperia z1.
I managed to get to the bottom of this .... i think. First of all if u have additional case cover with too small "window" around the lens or additional protective foil the problem is getting even bigger.... foil transports more light fom flash so check if the photo is better wothout additional protective foil or case cover (im not talking about original one).
Anyway....
My phone has silver border around the lens and i had same problem over and over again. Sometimes when i restarted it i managed to get few pictures of god quality.........one day i just painted this silver border with thin black marker with caution
and....viola.... problem dissapered... funny thing because out of 20 same models ony 2 experienced same problem ... all looked the same, dunno maybe flash is brighen on those 2 mabe some other problem ....anyway maybe its not the best solution but it helped me. cheers 
20-megapixel deception I believe I've received z1. With my friends we compare 13-megapixel Galaxy Note 3 SIM Express Anda we took! I would note 3 Automatic photo quality is also obvious that looks BETTER is utilized. z1 and Auto (8Megapixel) and hands (20megapixel) that WORSE results embarrass me. z1 BETTER than my camera phone that will make the other software I would request we've also specifically note 3. software software software WANT .....
Same problem with my camera. I have given for replacement.
Did you get the solution for the whitish thing at right side of the phone ?
I don't have any - Protective Film on lens, No Cover, Fingers away from flash, And its a new one hence i can't expect a Dirty lens. So what could possibly go wrong ?