Food for Thought: Puts on Leica

Dante_Stella said:
Cameras depreciate the fastest from new to used on day one. Holding a camera to the point the market price is relatively stable is the way to defeat this (the Leica cost of ownership in years 4 and 5 is very low). Dumping a camera quickly is the way to get hosed.

That said, Leica's pricing seems to operate on two levels. One is the theoretical list price (which need not be respected so long as that is not advertised). The other is the limitless supply of lower-priced "demos," which vastly outstrips the stated reasons why they exist. Has Leica used hundreds of M 240s at trade shows? Highly, highly doubtful. If you bought a demo, depreciation would be a non-issue.

Dante
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i've been buying demo Leica bodies and lenses since the 1990s

My 240 was a demo unit.

I'm not just talking about myself here, but the big picture and how it affects Leica and other people.

Leica's pricing strategy has confined them to a very narrow market. They are like an animal that only eats one type of plant. If there is any disruption to the delicate balance of their little ecosystem things can go pear shaped quickly. They have too much riding on one very expensive camera that appeals to a narrow group of photographers in a narrow economic tax bracket. There is no slack in the system.
 
Leica has always been a narrow market. Hand made opposed to mass produced instead of trying to compete with the one size fits all crowd. There's Leica and there's all of them. If Leica goes away then we are all stuck with the one size fits all cameras that keeps pushing the photographer farther out of the process. For me NO THANKS and I am not paying any more for what depreciates than those that buy top of the line Nicanons. Yeah we pay a lot for Leica glass but it you probably will not loose money on Leica lenses.

And I say quit worrying about batteries in 5 years and make images with these wonderful tools now and for the next 5 years. I have 2+ years and 30K + images I have made with my MM instead of worrying about if I am going to loose money on the tool I'm using or it becomes unusable in 5 more years. I could be dead before then and think of all the images I might not have taken and how much pleasure I would have missed.
 
Harry Lime said:
As far as depreciation goes here are a few thoughts

At roughly $8000 up front getting in to the 240 is a pretty big hurdle for most people to clear in the first place. If the camera depreciates 50% in 3 years because of the upgrade cycle, you will need about $4000 to get in to the newest model. Once the new model is out the value of the older camera will fall at a considerably faster rate, so if you delay to upgrade your expense of doing so eventually increases.

Now, if you are dedicated to shooting with the M and shoot enough, that's something you[re probably willing to accept.

But here's where is gets dicey.

I have six M film bodies, three R and one LTM.

If I'm just out and about I'll take one body and 1-2 lenses. But if you are going to do some serious work like covering an event or doc / PJ type of work you will need at least 2 bodies (35/50) and quite often I would take three (28/35/50).

M240 x 2 = $15,000
M240 x 3 = $23,000

Now add multiple batteries at $200 a pop plus chargers, so you may end up with another $800-2000.

Anyone want to calculate the depreciation on that kit over 3-4 years, let alone getting in to it? You better be making money off your camera or be a millionaire if we are talking about that kind of expense.

My film M and R bodies weren't cheap and I did purchase several of them new. But the M6ttl I purchased new 20 years ago is still running and will outlast me. I doubt that 240 will still be going 20 years from now. Leicas have never been cheap, but when I started the M6ttl was $2800. That was $800 more than a Canon 1-v or F5 and was jokingly referred to as the 'Leica Tax'. But if you really wanted one it was manageable. By the time the M7 came around I think it was $3500 and I paid about $3000 for the R6.2. $10,000 got you a multi camera system that would keep running as long as you were willing to maintain them. Yes, there is the added expense of film, but that is a slow trickle. You're putting out anywhere from a few dollars a roll to buying a few bricks at a time.



If you are going to hold on to the 240 for 10 years there are a few questions.

Can I get spare batteries 5 years from now? How about 8-10 years from now? You can't just stockpile them for future use, because depending on the chemistry they may have a certain shelf life of their own.

How long will Leica have spare parts? Anyone want to talk about M8/M9 sensor replacement?
It's not like it was with the analog bodies, where mechanical parts don't have a shelf life.

If you think depreciation of digital camera is a problem in still photography you should see what goes on in the world of digital cinema production.


Anyhow, if you can clear the $8000 hurdle of getting in to the M system and can live with a lifespan of 5 years then you're probably fine. It's a very nice camera and the first digital M that really feels like an M. The two worst things about it are the 'dumb' metering system, which will occasionally screw you if you are moving fast and the light becomes 'complicated' and the green tint in the blacks. You'll have to live with the occasional clipped whites, but you can fix the green shadows in post. But don't be fooled. The IQ out of the M is not in the same class as a Nikon D750 or 600. But you are trading that off for the M shooting experience and ergonomics.

I still think Leica has painted themselves in to a corner by not really having a tiered product line for the M-mount. They are in desperate need of a lower cost model and it could be anything from a lower pixel count full frame to a APS-C model in a lower cost body. But right now it's $8000 or you don't play at all, which limits their sales to a relatively small share of the market. If Leica made a lower spec $4000 CL they would be in a lot better shape, simply because they would be tapping in to a much larger pool of potential customers.





www.felidigiorgio.com
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Given all the above calculations, perhaps the wisest choice in terms of economic considerations is to abandon digital M cameras and stick with M3, M4 M5 film bodies and film. Any takers on that proposal?
 
1. This thread is about the state of Leica AG and whether they have over-invested at Wetzlar. My untutored opinion is that this may well be the case. If I did have shares in Leica AG I would be selling. The rescue strategy would be to close the T camera production line and the V line, and maybe keep the D-Lux line, and retool for even more lenses. Despite the enthusiasm for modern phone cameras anyone serious, anyone with a child or a cat, and anyone else interested in fast pictures will still want a camera qua camera.
2. But before all this I did spend $8k twice for an M9-P and an MM. For an amateur they have had a fair bit of use. And I don't want the M240. And I am happy. And a D3 was about the same price when it was the peak of Nikon's offerings I seem to remember. Before all the digital Ms this forum still had discussions about the hideous cost of Leicas, but enthusiastic twenty year olds were still finding a way to buy a good second hand M2 or M6. The significance of the entry price is overstated. Most people choose to spend similar amounts of money elsewhere.
 
Leica has not invested in Wetzlar. They rent it.. From ACM Projektentwicklung. Which is Dr. Kaufmann again.
 
Harry Lime said:
...
...The two worst things about it are the 'dumb' metering system, which will occasionally screw you if you are moving fast and the light becomes 'complicated' and the green tint in the blacks. You'll have to live with the occasional clipped whites, but you can fix the green shadows in post. ...
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The depreciation issue is real. For pros and semi-pros the depreciation is a tax write-oo (in most countries anyway). Of course non-pros take the full depreciation hit you detail.

I am unable to comment of the light metering issue. However there is a LightRoom plug-in that remediates the green color cast in shadows. The green color cast and a solution is discussed here.
 
jaapv said:
Leica has not invested in Wetzlar. They rent it.. From ACM Projektentwicklung. Which is Dr. Kaufmann again.
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Presumably the rent is not free. Irrespective of who has carried the capital costs of the new Wetzlar buildings, the move will have involved an additional cost to Leica. There is presumably also new machinery, tooling and office facilities/furnishings associated with the expansion of production (or does Dr Kauffman provide these too?:D). I have no idea whether Leica have over-invested or not but it is silly to pretend that the recent changes haven't had a significant impact on the accounts.
 
ian_watts said:
Presumably the rent is not free. Irrespective of who has carried the capital costs of the new Wetzlar buildings, the move will have involved an additional cost to Leica. There is presumably also new machinery, tooling and office facilities/furnishings associated with the expansion of production (or does Dr Kauffman provide these too?:D). I have no idea whether Leica have over-invested or not but it is silly to pretend that the recent changes haven't had a significant impact on the accounts.
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... capital expenditure goes straight onto the balance sheet as asset, so that is pretty neutral in respect of statutory accounts.

If they have signed a lease for a period one of the purchasing-models (I can't remember the name) allows one to treat, say a five-year lease as a single purchase even though one's paying monthly ... and then claim back the VAT content of the whole thing
 
ian_watts said:
Presumably the rent is not free. Irrespective of who has carried the capital costs of the new Wetzlar buildings, the move will have involved an additional cost to Leica. There is presumably also new machinery, tooling and office facilities/furnishings associated with the expansion of production (or does Dr Kauffman provide these too?:D). I have no idea whether Leica have over-invested or not but it is silly to pretend that the recent changes haven't had a significant impact on the accounts.
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Which nobody suggested. But from an accounting point of view property is different from rent - and there is no over-investment without investment.
 
Leica needs to find new rich customers. In the past it was done by Walter Benser.
In the 80`s sometime, Fred Maroon did a leica sponsored tour. It was well done.

I don`t like the Leica Shop idea, however stand alone camera stores are disappearing fast. So perhaps it is the only counter to get their product out there the best way possible. They are not going to sell a M camera from a big box store. Walmart/Sam`s has displays, but they are strictly low end consumer .

They could have Leica Days for demo products, but they largely got rid of the reps .

I believe current sales go to older customers who already have lenses. Somehow they need to find new younger buyers. I think the backlog a few years back was from the first full frame. People bought it and needed lenses.

Did they NEED the new factory in Wetzlar? Could that money have been better used.

In a nutshell, they need rich young buyers who can be sold and that is not an easy proposition in current economic climate.
 
Ronald M said:
Leica needs to find new rich customers. In the past it was done by Walter Benser.
In the 80`s sometime, Fred Maroon did a leica sponsored tour. It was well done.

I don`t like the Leica Shop idea, however stand alone camera stores are disappearing fast. So perhaps it is the only counter to get their product out there the best way possible. They are not going to sell a M camera from a big box store. Walmart/Sam`s has displays, but they are strictly low end consumer .
They could have Leica Days for demo products, but they largely got rid of the reps .
I believe current sales go to older customers who already have lenses. Somehow they need to find new younger buyers. I think the backlog a few years back was from the first full frame. People bought it and needed lenses.
Did they NEED the new factory in Wetzlar? Could that money have been better used.
In a nutshell, they need rich young buyers who can be sold and that is not an easy proposition in current economic climate.
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Yes.
"Food for thought".....Rolls Royce last year, have for the first time sold 4000 cars in a financial year, the base price being $645,000 and upwards to a million dollars.
They were heading downhill fast, kept alive by cash injections, and the brand was off the pace technologically.
Now here is the moment they turned it around, they employed Torsten Müller-Ötvös.
Last year was Müller-Ötvös's fifth in the job, and Rolls-Royce's fifth successive record year.
Within 2 weeks of commencing he went to see dealers, customers and prospects, and to understand the different markets....smart man.
Keeping it short, a few years ago, women accounted for just 1 per cent of customers. They now make up about one in seven.
Even in Saudi Arabia women are buying Rolls-Royces, even though they can't legally drive them. "They want to be chauffeured in the most exclusive environment."
Yes, one part of his strategy was he went for a market that did not exist for RR...women.

Leica might want to gets its head out and accept their business model is flawed...."Food for Thought" ;)
 
Leica got an influx of cash...from Bain Capita.....I mean...Blackstone..
And got super high on their own insane view of the world as related to their aggrandized products..
Spent the money like there was no tomorrow....essentially..blew it out..
So..instead of cutting costs and being realistic as well as pragmatic....and bringing the right product to right market...at a realistic price with the right QC etc..to the right customer base..
Well..they are where they are..
 
I don’t think it is a simple matter. It is clear that the high price is not caused by an excessive margin, otherwise Leica would be rolling in Euros.

So the cost side must be cut and that can only be done by bringing down the price of the production process without impacting quality. Things like replacing the half pound of brass on top by a carbon fiber material, designing for easy assembly instead of a zillion of little screws, introducing automation on certain processes, outsourcing simple parts to cheap production countries, standardizing parts to be used on other camera lines, do we really need that elaborate and expensive bottom plate? and I’m sure I missed a bunch of other no-quality-impact cost reducing measures.

Maybe an outsider CEO like this one can do a bit of streamlining.

On a sidetone, Leica did not get a money injection from Blackstone. They were brought in because Dr. Kaufmann wished to pull out part of his money.
The company did not gain capital.
 
YYV_146 said:
I haven't exactly done the math, but I suspect in this day and age digital is still the cheaper option. Digital is only expensive if you insist on being on the treadmill and must have the latest and greatest.

Being 1-2 years behind the curve lowers costs tremendously. 3-4 years and you're almost free from depreciation, unless something breaks. To illustrate my point - try putting together a 3-body digital kit using only cameras before 2009 at eBay prices, then repeat the experiment with cameras before 2005. The price difference is there, but not huge. If you buy 2009 stuff today, chances are you can still get back something in 4-5 years.
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Cheap way to do digital is a $125 6mp Pentax dslr on ebay or a used Fuji X for $250- $300. You always have to pay high $ for rangefinder. Pentax 6mp dslr = $125. Epson RD1 6mp = $1000.
 
jaapv said:
I don’t think it is a simple matter. It is clear that the high price is not caused by an excessive margin, otherwise Leica would be rolling in Euros.

So the cost side must be cut and that can only be done by bringing down the price of the production process without impacting quality. Things like replacing the half pound of brass on top by a carbon fiber material, designing for easy assembly instead of a zillion of little screws, introducing automation on certain processes, outsourcing simple parts to cheap production countries, standardizing parts to be used on other camera lines, do we really need that elaborate and expensive bottom plate? and I’m sure I missed a bunch of other no-quality-impact cost reducing measures.

Maybe an outsider CEO like this one can do a bit of streamlining.

On a sidetone, Leica did not get a money injection from Blackstone. They were brought in because Dr. Kaufmann wished to pull out part of his money.
The company did not gain capital.
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I read the M240(?) cost about $3000 to produce. I may have the # wrong, but they are built like a tank and do cost some $ to produce one way or another.
 
noisycheese said:
In other words, the 'blads and S2 are medium format pro cameras; therefore no one cares that they are priced in megadollars because no one really wants them - correct?

That still leaves us to think about the M system, particularly the flagship M240 and M-P. The question is: Are they pro cameras or not? If so (or if not) what makes them pro cameras (or what prevents them from being properly regarded as pro cameras)??

Leica apparently regards the M240 and M-P as pro cameras. I would have to say that line of thinking does hold water (to one degree or another, at least). As far as the M lenses, it would be nonsense to say that they are not up to professional capabilities.

To say that the flagship M cameras and lenses are not capable of being used professionally is doubtful IMHO. I can't see the wisdom of - but that's my viewpoint.

I'm still trying to decipher the animosity towards the Leica M system on the part of some photographers. It still just doesn't add up... :confused:

Maybe there should be a "Why I hate Leica, the M system and everyone who uses M cameras" thread to plumb the depths of this mindset.
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I'd say they are pro cameras when it comes to output and build quality for doc work. They are not great cams for macro or sports. Problem is they are too high $ for pros to stock 4 or 5 of them.
 
noisycheese said:
Given all the above calculations, perhaps the wisest choice in terms of economic considerations is to abandon digital M cameras and stick with M3, M4 M5 film bodies and film. Any takers on that proposal?
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Concerning Leica as a company:
At last Photokina they said the sales for their film M cameras are already slightly increasing, whereas sales of digital cameras are significantly decreasing.
But currently the overall sales of their film cameras are a small niche compared to the sales of their digital cameras.
But this relation will very likely change in the next years:
With the film revival the percentage of film cameras on sales will grow, the niche will be much bigger in some years.

I think it makes sense for Leica to use this trend.
New film cameras, e.g. like an improved, modern version of the very compact Leica CL, a compact fixed-lens camera, or the re-introduction of the R-System.
In the R-System a camera with a hybrid shutter like the Nikon FM3A, a camera combining the strengths of the Leica R6.2 and the Nikon FM3A would be very attractive. And unique on todays market. A camera which can use the advantages of an electronic shutter, but which can also be used without batteries.
With this you have a real differentiation, a product with a "Alleinstellungsmerkmal" on the market.
And no competition.

Cheers, Jan
 
jaapv said:
I don’t think it is a simple matter. It is clear that the high price is not caused by an excessive margin, otherwise Leica would be rolling in Euros. ....
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Because they sell so few cameras, they have to have high prices to support such a business.

The Rolls Royce comment above almost, but not quite, went there. Any car, guitar, gun, sofa company that strives to create "the best", but doesn't have much of a market, will have to charge a lot of money for their product. If no one bought iPhones, they would cost about $4,000 a phone. Leica has to remain a camera priced for Saudi sheikhs and Hollywood millionaires, because they have no other market.

Besides having huge demand, today's inexpensive products have extensible manufacturing, where the more people buy, the more they can quickly produce. The cost per unit goes down.

If Leica made a somewhat cheaper "entry level" camera, that was still good quality, they'd have to market it very vigorously. And hope it takes off. But with every luxury good there are levels of what you can buy. You can get a cheap $180 Chinese guitar for example, or a $900 Martin, or a $6,000 Collings. Leica is in the Collings realm - they make and sell very few, so their buyers pay many times what a comparable camera costs.
 
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