Panoramic photographs are used to make images of scenes that are too large to fit in a normal camera lens or even too big for the human eye to see at one time. Most well-known panoramas are outdoor landscape shots of geological features or city skylines, but they are useful for taking large pictures inside buildings as well. Panoramas are almost as old as photography itself. Professional photographers and inventors have been creating extreme wide-angle photos using a variety of methods since the nineteenth century, but until recently these required expensive specialized equipment and processing techniques. Several types of panoramic cameras have been built over the years that expose a large sheet of film by either moving a lens across it or exposing through a fixed lens with a very wide view angle. More recent innovations in photography include digital cameras and computerized image processing, which have made possible yet another panoramic photography technique: image stitching. Stitched panoramas allow much more flexibility than older panoramic cameras and are well within the budget of any amateur photographer. A stitched panorama starts off as a series of shot through a standard lens, with the camera in the same location, using the same exposure, but facing in different directions. Computer software then analyzes the separate images to determine which angle each one corresponds to, and finally combines all the images into a single seamless panorama.
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http://www.instructables.com/id/Panoramic_photography_with_free_software_and_cheap/