Roger Hicks
Veteran
Dear John,
I don't think I'm breaking any embargos by saying that based on my conversations with Leica (including Dr. Kaufmann) at Arles, the above is very nearly as far from the truth as it is possible to get.
Cheers,
R/
HiredArm
Newbie
I don't think that's the entire logic at all from some people. I agree that an M8 is a luxury for most. I disagree that there isn't a market for a less expensive line of Leica digital rangefinder cameras. A $2000 camera certainly isn't cheap but there is a market for a less expensive digital rangefinder. One only has to look at the mystique of the Epson RD-1 which commands a high price still for "outdated" technology.
I think many people here tend to only think in extremes as in if it's not a M then it's crap, or if it's not as expensive than it's a cheap product. There is a large medium between a marquee product and a bargain basement one. I refuse to believe that Leica isn't able to make a high quality digital rangefinder camera for less than $5000 USD. It doesn't have to be to the same exact level of an M. Having a prestigious name is one thing. Continuing to not understand what the market can and will bear is the "disconnect" that a lot of people feel is a problem with Leica's business model. A price increase when you suffer a 38% loss is not a smart business move any way you cut it.
infrequent
Well-known
@hiredArm - i don't think roger's comparison works out...atleast as far as the M8 is concerned. a patek phillipe is a mechanical timepiece that will be there for the next gen. a leica M8 certainly won't be.
Roger Hicks
Veteran
No, not everyone thinks that way, it's true. But many seem to.
Yes, of course there's a market for a cheaper digital RF. Can Leica build it? Not in Solms. And they are not keen on (further) diluting the Leica brand with an interchangeable-lens M-compatible camera built elsewhere. How (and where) would you go about building a cheaper, second-string M-compatible camera under the Leica brand?
Next: a price increase when you suffer a 38% loss looks to me like an extremely rational business move. What alternatives do you propose? Cut prices and suffer a bigger loss (they're building 'em as fast as they can)? Spend a fortune on increasing production capacity and bringing out new models, involving much greater short term losses? 'Badge engineer' someone else's cameras? Leave the prices where they are?
Imagine you are Dr. Kaufmann. What would be a smart business move in the context? Without wishing to be rude, I assume you are not a man who is so rich that he can afford to run Leica as a paying hobby -- and I think that the key word there is paying. A man who has made a fortune in other businesses may fairly be assumed capable of making rational decisions when it comes to Leica also.
Now, I'll go into the realms of fantasy too. If I could afford to buy Leica, I'd give it to the employees in the form of a trust -- like Zeiss. That way I'd be confident it would grow and prosper. I begin to wonder if the publicly quoted limited liability company may not be an obsolescent business model.
Cheers,
R.
Ray Nalley
Well-known
Roger, you seem to suggest that contrary to slowing production of the M8, Leica plans to ramp up that production? That would seem to contradict their statement in the latest quarterly report:
"Leica Camera Group closed the first quarter with sales of € 26,999,000 (previous year:
€ 43,560,000). The strong decline is due to reduced sales of the M system and of digital
compact cameras, resulting from delays in the introduction of new products."
"Leica Camera Group closed the first quarter with sales of € 26,999,000 (previous year:
€ 43,560,000). The strong decline is due to reduced sales of the M system and of digital
compact cameras, resulting from delays in the introduction of new products."
infrequent
Well-known
@Roger - How would Leica's brand dilute because they switch production to Japan? I don't think apart from the collectors, anyone cares where the cameras are built as long the Leica ethos is there. I would rather see Leica in 20 yrs making cameras in Asia then struggling in Europe.
Surely the long term solution is to expand the customer base and secure the future. Not do a short-term price increase and cater to an even diminishing clientele.
Surely the long term solution is to expand the customer base and secure the future. Not do a short-term price increase and cater to an even diminishing clientele.
Ray Nalley
Well-known
Increasing prices in the face of falling sales does seem more like an end game strategy then a plan for the future. But, I'll acknowledge that Roger does know things we don't where Leica is concerned, so Leica must have a rabbit to pull out of the hat at Photokina.
Roger Hicks
Veteran
Why not?
If it takes good pictures, and continues to do so, what's to stop anyone using it in 50 years time -- IF Leica continues to support it?
Sure, parts may become unavailable: a risk with bought-in parts. But I remember the uncle of a friend cheerfully using his Leica A in the late 70s, because he'd got used to it in the previous 50 years.
Besides which, the parallel was not with durability: it was with luxury. If you want another example, consider a pair of Lobb shoes at GBP 2290 (+ 17.5% VAT in the UK -- call it GBP 2500 or $4500 US).
If I could afford Lobb Wellington boots (GBP 3238 + VAT) I'd probably wear nothing else. But I can't. I can't even afford Wellingtons from Gieves any more. My first pair in the 60s was GBP 12.50, the second, GBP 25, the third, GBP 65, and when they hit GBP 250 (thirty years ago) I stopped buying them. Clearly it is possible to make boots more cheaply. Do I say that Lobb and Gieves should make them? Of course not.
Cheers,
R.
Roger Hicks
Veteran
They're making M8s as fast as they can, and do not neglect the fact that 'introduction of new products' can include lenses, sport optics (a substantial part of the UK market in particular) and reflex cameras.
Cheers,
R.
Roger Hicks
Veteran
This is a matter of opinion. My opinion -- and Leica's -- is that part of what they are selling is German mystique and tradition: the result of 150 years or more of fine engineering. What, after all, is an 'ethos' in this context?
Fire almost everyone in Solms; move the remainder to Japan (if they're willing to go); and suddenly 'ethos' rings very hollow indeed.
Cheers,
R.
infrequent
Well-known
Ray Nalley
Well-known
Still having a problem with them saying they are losing money from falling sales and you saying they are making M8's as fast as they can. I'm not saying that you are not correct, just saying it doesn't make sense. Is Leica lying in the quarterly report?
retow
Well-known
Since everybody else gets to voice their opinion, I will do so too
All of you that are worried about the survival of Leica, do you seriously believe that it is linked to making a cheaper digital version of a 50 y.o. camera? I would think that if they put out a “built in Asia” $2000 M-mount rangefinder, it would sink its teeth into the M8 sales (I probably would have opted for that one myself, instead of my M8). But would they make any more money?
I'm looking forward to see if Leica has plans for the Micro FourThirds format...
Not with the camera. But it might grow the RF market as a whole and lens sales would go up. That is where the money can be made. Same with DSLRs.
retow
Well-known
There are several statements in your post I'd disagree with.
-Successfull manufacturing in high labour cost countries is a challenge, but possible, as other, and not to few examples' show (Porsche, BMW, Swiss Watch Industry to name some prominent ones). Direct labour cost is only one element among others when it comes to product costing. But it requires volumes (economies of scale) and lean (automated) processes to eventually be cost competitive. Leica's way of producing is still to labour intense. However, no matter where they would manufacture, there current business model might fail, i.e. in low labour cost environments workers skills are lacking and productivity is low in comparison.
What they need to survive in the long term is a platform stragegy (Porsche with its Boxster), to grow the market segment demanding for the type of products they produce, allowing to manufactue higher volumes with more automated processes to reduce costs/per unit.
- By offering a lower priced digital M-mount camera the market segment would grow and demand for lenses increase - this is where the volume opportunity is. Maybe not so much for the high priced Lux and Cron models, but with lenses priced in the ranges of their Summarits.
-Increasing prices when volume demand of ones product is falling (!) is from the text book "of how not to do it". Exactly this move ain't fixing revenue shortfalls.
Best
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pmu
Well-known
Well, I bet there are for example LOT of professional photographers who are forced to use DSLR instead of digital RF. Thousands, tens of thousands. Todays prices in Leicas M8 and lenses are so ridiculous compared to Canon or Nikon that there is no option... $3000 for Nikon D700 or $5500 (or whatever it is, I dunno) for M8...an average rangefinder loving, but realistic "camera is a tool" thinking professional will not think a second which one to buy. Specially when he/she takes a look at the prices of lenses and the way how the camera performs and what kind of IQ it has. In a way, lot of photographers are just forced to be in DSLR world if they want to shoot digitally.
The bank account of the company who makes the first top quality digi RF in the price range of DSLR cameras will sing hallelujah. No doubt. M8 is not a such camera.
EDIT: Let's not forget that there are excellent CV and Zeiss lenses also available, you don't have to put your money into Leica glass. With the same money like in DSLR lens world you can get the lenses for your rf also... Gimme that 2000-3000 USD digital rf body and I am able to get 2 bodies and all the lenses I need with less money than what I would have to put today in 2 body DSLR setup.
I am not a business man, but I fail to see how a $1000-3000 good digi rf would not be the best thing ever for a camera company nowadays.
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Ray Nalley
Well-known
Most pros aren't "forced to use DSLR instead of a digital RF." Most professionals shoot a range of assignments that demand the versatility of a DSLR over an RF. Just a fact of life. There isn't a huge unfulfilled market for DRF's among pros. If there were, Nikon or Canon would have filled it long ago.
Avotius
Some guy
Ok I have figured it out, its all so simple. The workers in Portugal must be getting a raise, thats the reason prices will continue to go up.
Ray Nalley
Well-known
Avotius, you could be onto something there. 
dcsang
Canadian & Not A Dentist
People seem to forget that there's a whopping 451 employees in Solms - They don't even have a voicemail system when you call customer service (not that that is a bad thing) - so all this talk about ramping up production and creating a new line of camera etc. would be difficult, I think, for Leica to do without contracting out much of the production. This is just my opinion mind you and I'm no where near to Leica like Roger may be.
Oh, and if you're thinking of Portugal, ya, there's 477 employees there (yep, Portugal has more Leica camera staff than the "head office") whilst there are 190 "elsewhere" (I would assume that includes New Jersey).
Info is from this (in)famous article:
http://www.economist.com/business/displaystory.cfm?story_id=11413199
Dave
- so all this talk about ramping up production and creating a new line of camera etc. would be difficult, I think, for Leica to do without contracting out much of the production. This is just my opinion mind you and I'm no where near to Leica like Roger may be. Oh, and if you're thinking of Portugal, ya, there's 477 employees there (yep, Portugal has more Leica camera staff than the "head office") whilst there are 190 "elsewhere" (I would assume that includes New Jersey).
Info is from this (in)famous article:
http://www.economist.com/business/displaystory.cfm?story_id=11413199
Dave
tomasis
Well-known
not everyone affords Porsche Boxster.
not everyone affords Leica M8.
Nissan GTR is still expensive for me
Leica doesnt worry about their HIGH prices because it exist Zeiss and CV beside it. So it is up greedy consumers choices.
Who ever needs more than a body and a lens?
not everyone affords Leica M8.
Nissan GTR is still expensive for me
Leica doesnt worry about their HIGH prices because it exist Zeiss and CV beside it. So it is up greedy consumers choices.
Who ever needs more than a body and a lens?