Ben Z
Veteran
I wish I could share your optimism regarding the economy. In the US, dentistry as a whole is just as depressed as it was two years ago. Everyone I know in private practice has cut their fees and working hours and laid off staff and has no immediate plans to reverse any of that. Elective procedures like "smile makeovers" and veneers are almost nil. Medicine in general isn't so bad off, but dermatologists and plastic surgeons also are cutting their fees and advertising like crazy. Retail businesses and restaurants are croaking right and left, and driving down every commercial street it's one "For Lease" sign after another on office and retail space, with enticements like 4 months free rent. The only businesses that are prospering right now are service businesses like auto repair and home remodelers, because people are electing to fix up their old cars and houses instead of buying new ones. Acknowledging the few thousand guys around the world who have or are in line to buy an M9, the majority of US citizens are still curtailing spending on non-life-essentials.
Regardless of what pure economists say regarding the recovery of the economy itself, socioeconomists, social anthropologists and psychologists agree it will take years for the majority of peoples' spending habits to revert, if ever. There is nothing happening to stem the tide of outsourcing to China, India and Brazil, so no reason to expect those jobs to return to the US. Among the largest single age-demographic in the US now, the baby-boomers, about half are already at retirement age, and the rest don't have enough working years left to replenish their decimated nest-eggs, particularly if they spend on luxury goods. Pardon my ranting, but it riles me to hear these flippant proclamations that the recession is temporary, when the reality is for many of us the lifestyle-downgrade it necessitated is most likely permanent.
Between fall of '06 and spring of '07 there was also a backlog and waiting lines for the M8, but within a couple months they were in plentiful supply...and most people were in much better financial shape back then. Unless Leica is purposely holding back production, I don't see the supply exceeding the demand for much longer.
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jaapv
RFF Sponsoring Member.
A difference to Europe there then. We are doing quite nicely, thank you 
In fact there was talk about relaxing price controls in our country, but that has been called off out of concern about extreme price hikes.
In fact there was talk about relaxing price controls in our country, but that has been called off out of concern about extreme price hikes.
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Roger Hicks
Veteran
Dear Ben,
(Highlighted portion) Like smile makeovers?
ALL recessions are temporary. It's just a question of how long they last.
'Lifestle-downgrades'? Not, I suspect, a major problem for those who have lived modestly and within their means, especially if they are prepared to go on working (not necessarily full time).
I'm with Jaap (in general, that is -- dunno about dentistry specifically). Things in Europe aren't so bad. Nor (I suspect) are they going to get vastly worse.
The USA is an ever less important market for Leica. China and India are ever more important. Sure, the USA is still important, but nothing like as important as it was. The M9 was introduced eight months ago and demand is still very high, so it's going to be a while before there's a surplus.
Cheers,
R.
blimey
Established
Great example. But the surplus of M8 was due to Leica purist acknowledging the M8 and its flaws. If I recalled reading posts then, many of the purist were extremely unhappy with the M8. Hence, set and pave the way for informational conformity. Can you believe the great reviewers of Leica product forget to detect the IR problems initially? hehe.
The M9 is quite the opposite. Everyone knows now, that the M9 should have been the first Leica digital. It is just more mature of a product. IMO, the waiting list will be longer. I doubt, they are holding production. The demand is just to high despite the economy woes.
I am pulling for Europe because it affects us in the USA. It is a global economy and everyone has exposures...
ps. im looking over Wall St. right now... no panic, lots of traders smiling and smoking and talking.
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Calzone
Gear Whore #1
The next real tipping point will be Portugal; and, because so many Portugese loans are owned by Spain, Spain will soon follow. The EU/Euro is possibly doomed. Look at the markets and the smart money, because they are telling us the future.
I agree with Roger that the U.S. is becoming less important to Gemany's export economy, but I also believe Ben is also correct in the structual change that has occured in the American standard of living that unfortunately is likely to become permenant. The reason why both Roger and Ben are correct can be summed up in a few words: Americans have suddenly become poorer.
Recessions do end sooner or later, but I would not call what we are experiancing now/today as a typical recession. This time is differant. Prosperity as we use to know it has changed and is likely gone. The idea of unregulated capitolism (Reaganomics) has reached its logical conclusion (ruin) and is not/was not sustainable.
Back on topic: Fact is more recently in November and December 2008, just after the Credit Crisis that began in September 2008 Leica had rebates on selected lenses. The rebate on a 50 Elmar was $300.00. I say expect rebates soon.
Cal
Ben Z
Veteran
I don't mean to sound dismissive, but I'm afraid there are some shaky assumptions implicit in that. Like, that they'll be in good enough health to keep working indefinitely. And that their career hasn't been permanently outsourced for half salary to China or India. And that their retirement portfolio has a shot at rebounding in a decade or less, i.e. they didn't lose big to some fraudulent investment scam. And that inflation will remain at or near nil as it has for the past 6-7 years, the prices of Leica gear nonwithstanding.
Any hard numbers as to how much revenue Leica made from China and India last year? Projections for next year? Sounds a little far-fetched to me. A few years ago I remember reading on forums that China and India would be the salvation of film, too. Hasn't quite come to be AFAIK.
And so it was for the M8 8 months after release. Once Leica began shipping at their full daily production capacity (small as that is considering the size of their assembly line---I've seen it) it only took about 2 months for the waiting lists to dry up. Allowing that the M9 doesn't have some of the issues that soured people off the M8, I'll be liberal and predict it might be 6 months before there are no more waiting lists. Unless, as I said before, Leica purposely restricts production so as not to end up with surplus. Not necessarily a bad business move for a tiny company.
Harry Lime
Practitioner
How do then explain that the cost of a pro level Nikon or Canon has remained pretty much unchanged for the last 5 - 10 years? In some cases it's actually come down.
I suspect that the doubling of Leica prices involves more than a black and white answer.
Roger Hicks
Veteran
Well, for a start, Nikons and Canons aren't priced in euros, and second, they're in fierce competition with one another -- unlike Leica, which has no competition.
Second, there's a big difference between mass-produced cameras and ones that are hand-made.
Of course there's never a black and white answer, but given that the numbers (inflation and dollar exchange rate) give a very convincing answer, it seems odd to ignore them.
There's also the possibility, of course, that Nikon and Canon pro cameras were selling with fatter profit margins than Leicas, leaving more room to trim fat. By no means certan, but equaly, by no means impossible.
Cheers,
R.
Roger Hicks
Veteran
Dear Ben,
As Cal said, we can both be at least part right. Point fully taken about exported jobs and about health, but at least here in Europe we have health care. Investment scams are self inflicted wounds -- if it sounds too good to be true, it probably is -- but I'm not so sure about 'nil inflation'. Have you any government figures on this?
No, I don't have hard figures of Chinese and Indian sales of Leicas, and even when I do have hard figures they are normally given in coinfidence. Let's just say it's an informed speculation.
To quote HH Dalai Lama on another subject entirely, "We'll just wait and see."
Cheers,
R.
Tom Niblick
Well-known
Ben,
I live on a little island in the middle of the Pacific Ocean so, other than watching The Nightly Business Report, BBC News and PBS NewsHour, the only other way I know how things are going is by my own business. In November of 2008, my billings were cut by two-thirds. There was no Christmas bump in 2008. 2009 saw billings cut in half. November 2009 saw a 10% increase. January-March saw another 20% increase. Now, I'm only down about 20%... "only".
What I do for a living is totally unnecessary for mankind's survival — I reproduce art. Painters, galleries and museums bring me their originals, I photograph them then print giclee copies on canvas or paper. As we all know, art is the first thing cut from individual's or corporate budgets. People only resume buying art when their budgets have recovered.
Pre-recession, both of my printers ran 10 hours a day, 6 days a week. Now one printer runs 5-6 hours a day, 4 or 5 days a week. I've cut expenses where I could, and eat a lot of beans, but I'm still here and glad that at least one of my printers are going since there were days in 2009 when both printers were silent and the phone never rang.
So overall, my glass is half fill and rising. And I'm very optimistic. Especially since most of my competitors have gone bankrupt over the last 18 months. I'm the last man standing.
Still, I've covered my bets. I'm bringing my boat down from Seattle to Hawaii and will move aboard if the economy slips again. Moreover, I'm not in the market for a new car or any toys. My M9 fund went to replace a computer and the remainder of the fund went into new sails and rigging for my floating economic bomb shelter.
If it all goes to hell and I'm forced to sell my house and my studio, you can be damn sure I'll buy that M9 before I set sail.
Tom
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Ben Z
Veteran
Again that's a bit simplistic a generalization. I know a number of very sharp-minded, successful-in-their-own-right businessmen who got taken in by Bernie Madoff. The very reason he was able to dupe those people was he did not make it sound too good to be true. The returns he offered were very good, but not so outstanding as to raise savvy peoples' antennae. Had it not been for the stock market crashing and his investors all wanting to cash out at once, he most likely would never have been caught.
Gov't is the last place I'd rely on for accurate figures on anything
I just go based on cost of living. The only thing that has gone up measurably here in the last several years has been a)gasoline, but it was a spike and has been holding steady; b)my health insurance, but the raises are based on my advancing age. OTOH my office rent went down substantially (negotiated lower rate and froze it for 6 years), as did our property tax (due to dropping property values), which more than balance out the increases in gas and health insurance. Other items of daily necessity like groceries and clothing haven't risen. A new 9th-gen 2010 Mercedes E-350 stickers out within $1000 of what I paid for an 8th-gen back in Nov of 2002. I'm pretty anal about record keeping. And nothing, I mean no-thing in my sphere of buying has risen 100%+ other than Leica.Frankly I'd be fine if Leica moved their production to China if it meant cutting their prices in half. I doubt a Chinese factory would let that many more defects slip through QC than Solms.
Interestingly, he was here in my town speaking back in March...don't recall him saying that though
Harry Lime
Practitioner
I was referring to the Canon/Nikon prices in US dollars.
True. Daniels was asked about the high price of the M9 and his answer basically was 'tough luck if you can't afford one.' They are the only game in town if you want a digital RF, so they can charge what they want.
There is a lot of handwork involved in the pro level bodies from Nikon and Canon, although I do agree that the M9 is even more involved.
A few months ago Leica posted an advertisement for a production line engineer. Let's hope that at least some level of automation will arrive in Solms (or Portugal).
I certainly agree that the world economy is a factor.
I offer two more explanations...
- As Leica's sales figures dropped prior to the arrival of the M8 and now M9, they jacked up their prices to maintain a certain level of income on low sales figures.
- Leica has come to see itself as a luxury brand like Monte Blanc or Gucci and therefore feels that they can demand a premium for the red dot.
Could be. It could also be that Leica is making a much bigger profit on lenses and cameras than anyone suspects. Sort if like when Sculley was running Apple and they were making something like 20-40% profit on boxes (while pricing themselves out of the market, but that's another thread)
Tim Gray
Well-known
Canon and Nikon lens prices *have* been going up. Prices for new designs are also higher, and people are complaining about them. I've been eyeing a 135L for a couple years. Not too long ago it was around $800 if I remember correctly. Now its about $1000. Not quite the Leica increase, but still...
Their camera prices have been going down, that's true. However, I think it's hard to discount the benefits of a growing market in DSLRs over the past couple years and maturing of the technology in them. I would suspect it's a lot easier for Canon to make a full frame DSLR now than it was in 2002. That has driven prices down quite a bit.
Ben Z
Veteran
Buyers don't really give a hoot what the product is "priced in" they care and compare to other items in terms of prices in their own currency. That's a reality of international commerce. In re your second point, I'm glad you allow that Leica's price raises have other factors behind them other than international currency rates.
Yes, for starters, more consistent quality. Robots don't get colds or have fights with their wives before leaving for work in the morning. But I think you overestimate the amount of automation in Nikon or Canon's high-end assembly. I've seen those factories as well as Leica's, and the difference is more of scale than process. Lots of women in hairnets and gloves sitting in rows at benches...just that there are more of them and they're Asian. Nikon and Canon also rely less on subcontractors. Canon even makes their sensors in-house.
Neither inflation nor dollar exchange rate accounts for a doubling in price. Other German companies, or at least their US distributors, have not raised prices anywhere in that realm. So even if you were correct about the numbers, it still leaves open the question as to why those other companies haven't, and Leica has. The only logical answer seems to be that (eg) Mercedes doesn't think the status symbol of the 3-pointed star would be compelling enough for Americans to pay $100K for a C-Class, while Leica believes it's loyal fans will buy a Summicron for twice what it cost a few years ago...and that belief seems to be quite correct.
Nothing is impossible, but I think we'd all agree given their respective sales figures, the most likely scenario is Nikon and Canon choose to sacrifice some profit margin and more than make it up on volume.
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Ben Z
Veteran
Buyers don't really give a hoot what the product is "priced in" they care and compare to other items in terms of prices in their own currency. That's a reality of international commerce. In re your second point, I'm glad you're coming around to agree that Leica's price raises have little to to with international currency rates.
Yes, for starters, more consistent quality. Robots don't get colds or have fights with their wives before leaving for work in the morning. But I think you overestimate the amount of automation in Nikon or Canon's high-end assembly. I've seen those factories as well as Leica's, and the difference is more of scale than process.
Neither inflation nor dollar exchange rate accounts for a doubling in price. Other German companies, or at least their US distributors, have not raised prices anywhere in that realm. So even if you were correct about the numbers, it still leaves open the question as to why those other companies haven't, and Leica has. The only logical answer seems to be that (eg) Mercedes doesn't think the status symbol of the 3-pointed star would be compelling enough for Americans to pay $100K for a C-Class, while Leica believes it's loyal fans will buy a Summicron for twice what it cost a few years ago...and that belief seems to be quite correct.
Nothing is impossible, but I think we'd all agree given their respective sales figures, the most likely scenario is Nikon and Canon choose to sacrifice some profit margin and more than make it up on volume.
Please stay focused on the topic, if you would, and refrain from political, economic, or personal comments that raise tempers. Thanks for your cooperation...
Also, FWIW, it seems to me pointless to speculate about profit/loss within a private company.
Further, FWIW, the Mercedes Benz relevance to Leica is questionable since M-B have a plant in Alabama for at least assembly, perhaps some manufacture... and possibly source some components from other US/Mexican/Canadian companies.
Also, FWIW, it seems to me pointless to speculate about profit/loss within a private company.
Further, FWIW, the Mercedes Benz relevance to Leica is questionable since M-B have a plant in Alabama for at least assembly, perhaps some manufacture... and possibly source some components from other US/Mexican/Canadian companies.
Traut
Well-known
If a given item in Europe is $1,000 Euros for example and the euro/dollar rate drops. THEN ALL OTHER THINGS BEING EQUAL the price in dollars will decrease. That is why Europeans travelled to the USA to purchase European manufactured goods.
This works particularly well for used and vintage items.
I collect vintage watches. This is an opportunity for me to acquire for my collection.
Manufacturers are not able to respond or need to for the most part. Prices stay the same - the ability to purchase for a given amount of labor changes.
This works particularly well for used and vintage items.
I collect vintage watches. This is an opportunity for me to acquire for my collection.
Manufacturers are not able to respond or need to for the most part. Prices stay the same - the ability to purchase for a given amount of labor changes.
Leigh Youdale
Well-known
Hey, reading this is getting to be fun! I've never come across so many economic forecasting gurus in one place. But to comply with our moderator's plea to stay on track, I propose a fresh line of analysis and reasoning for all - that there should be a new world economic indicator developed named "The Leica Index" and that price and sales levels in different countries should be factored in ( a bit like the MacDonalds price index we see occasionally).
The Leica Index could be used worldwide as an indicator of economic growth, prosperity, decline, collapse and we could probably set up a futures trading operation in Leicas - complete with short selling. We would see Leicagraphs on the TV at night and a whole new growth industry in academia teaching Leicanomics. The possibilities are endless!
The Leica Index could be used worldwide as an indicator of economic growth, prosperity, decline, collapse and we could probably set up a futures trading operation in Leicas - complete with short selling. We would see Leicagraphs on the TV at night and a whole new growth industry in academia teaching Leicanomics. The possibilities are endless!
Roger Hicks
Veteran
The Mars Bar Index is my favourite economic indicator. A Mars Bar is an ingot of commodities of roughly standard size and remarkably standard composition. Pricing things in Mars Bars gives a wonderful indication of inflation-adjusted prices.
As for economic and political forecasting, I think it was Supermac (Macmillan) who, when asked about the most important factors influencing political choices and outcomes, replied, "Events, dear boy. Events."
Addendum: I'd be surprised at parity. The dollar is creeping back up. My guess -- probaby at least as valuable as anyone else's, i.e. not very -- is that it's going to stablize in the $1.25-$1.30 range in the short term.
Cheers,
R.
As for economic and political forecasting, I think it was Supermac (Macmillan) who, when asked about the most important factors influencing political choices and outcomes, replied, "Events, dear boy. Events."
Addendum: I'd be surprised at parity. The dollar is creeping back up. My guess -- probaby at least as valuable as anyone else's, i.e. not very -- is that it's going to stablize in the $1.25-$1.30 range in the short term.
Cheers,
R.
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Alberti
Well-known
Honestly I am concerned with the steep price increase of the Leica M9 regards M8.
As I see it this does not serve the customer segment that used the one I am positioning myself. It is hard to explain the missus about the price tag.
It looks like Leica Marketing moved to a premium segment (the LHMV class so to say). The result would be that the traditional outlets and channels do not care to support the brand anymore.
Well at least I now have a hard time to find shops carrying the brand. And flag-shops are nowhere to be found.
Let’s look at it differently. Once Rover had a cost-plus price strategy. They always had a back-log of orders. Then some smart alec came and decided to increase the price so the backlog disappeared. The result: the 20%+ extra price led customers away. They lost market share.
alberti
As I see it this does not serve the customer segment that used the one I am positioning myself. It is hard to explain the missus about the price tag.
It looks like Leica Marketing moved to a premium segment (the LHMV class so to say). The result would be that the traditional outlets and channels do not care to support the brand anymore.
Well at least I now have a hard time to find shops carrying the brand. And flag-shops are nowhere to be found.
Let’s look at it differently. Once Rover had a cost-plus price strategy. They always had a back-log of orders. Then some smart alec came and decided to increase the price so the backlog disappeared. The result: the 20%+ extra price led customers away. They lost market share.
alberti
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