Seth Godin on luxury vs utility - thoughts about Leica

[lynnb]

An interesting blog post today from Seth Godin discussing the tension between luxury tools vs utility tools - he uses Apple as a prime example. However I think the comments could equally apply to the balancing act faced by Leica.

On one hand, they have a long heritage of making superb photographic tools. On the other, they have become a luxury brand - which has no doubt kept the company afloat, but makes them vulnerable to the likes of Fuji (and just perhaps in the future, Sony/Zeiss), who (in Fuji's case) are intent on occupying the "well-designed-and-built quality tools" sphere at a significantly lower price.

I hope Leica manage to manage this tension successfully. As other rangefinder-type platforms start to proliferate (apart from Fuji I include the non-RF A7s here as it seems to be a viable option for M-mount lenses), the pressure from below will only increase.

Godin's blog made me wonder if Leica is making a strategic mistake in adding video capabilities to the M240. Perhaps the brand would be stronger if it concentrated on the tool's primary function - still picture taking - rather than adding other capabilities that invite comparison with more capable video platforms. Video technology is changing quickly so these functions are likely to become rapidly obsolete.

What do you think?

 

[lynnb]

...at the end of the article Godin says:

"It's possible (but unlikely) that Apple will become the first long-term cutting-edge tool maker that simultaneously exists as a profitable luxury brand."

I'd argue that Leica has achieved that. Their challenge will be to maintain it.

 

[Jamie Pillers]

Thanks for the link, Lynn. It seems to me that there is a difference between Apple and Leica that, in my mind, makes this analogy shaky. Apple products, as luxurious as they may seem, are not so radically more expensive than their competitors. I've always known that I pay a premium to use Apple products, but that the premium wasn't so big that it made me feel foolish. The Leica premium on the other hand is quite substantial and has always been a barrier too large for me to justify. Will this difference contribute to Leica's eventual demise? I doubt it. There always seems to be plenty of wealth around to support such luxury.

 

[Ben Z]

As other rangefinder-type platforms start to proliferate.....

Godin's blog made me wonder if Leica is making a strategic mistake in adding video capabilities to the M240.

What do you think?

I bolded "rangefinder-type" because at this point Leica is the only one making an optomechanical rangefinder. There may be few purists who even though they can disable the video button in firmware, their OCD would dissuade them from buying the camera. Same with Live View. But as long as Leica doesn't delete the rangefinder/viewfinder it's still a unique product with no competition in the niche.

 

[semi-ambivalent]

Thanks for the link, Lynn. It seems to me that there is a difference between Apple and Leica that, in my mind, makes this analogy shaky. Apple products, as luxurious as they may seem, are not so radically more expensive than their competitors. I've always known that I pay a premium to use Apple products, but that the premium wasn't so big that it made me feel foolish. The Leica premium on the other hand is quite substantial and has always been a barrier too large for me to justify. Will this difference contribute to Leica's eventual demise? I doubt it. There always seems to be plenty of wealth around to support such luxury.

If Leicas, like Apple products, were built in China at China's wages, that Leica premium might not be so large in comparison. The workers in Portugal who built my MP are paid like kings compared to the indentured servants who built your i-whatever.

In any event who cares? I know I'm paying something extra and I agree with that because I want Leica. However I would not pay $10,000 for a Birkin handbag because I don't want one of those, or a plastic Louis Vuitton gym bag. It's a personal calculus. Besides, Leicas are immune to the whims of fashion. I think becoming wildy popular might be a very bad thing for Leica although the iPhone seems to manage it.

s-a

 

[kshapero]

If Leicas, like Apple products, were built in China at China's wages, that Leica premium might not be so large in comparison. The workers in Portugal who built my MP are paid like kings compared to the indentured servants who built your i-whatever.

Good point. As nice as iPhones are (and I own a bunch of them), slavery is what keeps the price down. I applaud Leica for paying their workers a fair wage. Damn, I am starting to feel guilty.

 

[YYV_146]

Good point. As nice as iPhones are (and I own a bunch of them), slavery is what keeps the price down. I applaud Leica for paying their workers a fair wage. Damn, I am starting to feel guilty.

Slavery? I beg your pardon. These people are free to come and go. They earn wages sufficient for their needs and the commodity prices in China. The typical Foxconn worker earns ~$1100 per month (on top of room & a food plan), which is more than enough to live in Guangzhou if you are young and single. These are people who work hard to save a bit of extra cash to get a college degree or start a family. Calling them slaves is an insult to their dignity and efforts.

And yes, I grew up in a small town in Northern China. Before I started high school, my family did not have much money. So I understand, and therefore have great respect for the blue-collars who are making your iPhones. You should be feeling guilty about not buying enough iPhones, since the more you spend the better their lives will be.

 

[YYV_146]

Staying on topic, Leica is very much about uncompromising optical performance. But their bodies are not competitive as professional tools. A professional cares about depreciation, pro services and versatility. With the exception of the S system I think Leica offers neither.

But Leica is competitive in the sense that it has a business strategy that allows it to cater to both the enthusiast market and the luxury crowd. By maintain presence in one market it deepens its influence in the other. Go to Hong Kong and you'll see both types: rich tourist snapping X and T cameras up and experienced RF users.

 

[Lucadomi]

I am so relieved to hear that worker in Asia are not exploited.
It is a free world after all and workers have nothing to complain (Really?)
Calling them slave is wrong, they deserve respect. However, they are exploited.
I wonder what the labour movement in China would say about this.
Anyway,
Apple is number 5 in the Fortune 500 list. One of the biggest companies in the world. I think they know how to be profitable. I am not sure their success is based on luxury items.
Leica is probably on different scale.

 

[thegman]

I own Apple products, but for me, they're not a luxury brand in the same way Leica is, or perhaps Mont Blanc, or Omega. Firstly, Apple products, spec for spec, are actually not that expensive.

Second of all, while some Apple products are built quite well, there are others that are not. My rule of thumb is that well built things are screwed not glued.

I think Apple is luxury like a nightclub is, sure, they'll sell you a bottle of champagne for $1000, and it's all kind of shiny, but it's skin deep.

Don't get me wrong, I think Apple makes some great stuff, but they're still in the technology market, which is cutthroat, not just on price, but in the upgrade cycle too, which kind of prohibits making a something like a Breitling watch which can/should be passed from generation to generation.

Even Leica I don't think is a truly luxury brand in the way a Swiss watchmaker is. The digital products, are, whether we like it or not, disposable in a way that a watch is not. That's not a dig at Leica or digital at all, I love computers and electronics, but I accept they don't have any longevity.

Electronics always has a lifespan, which will always mean that people cannot see them as lifelong heirlooms or something which although expensive, will last a lifetime.

 

[Pioneer]

It is an interesting blog post and actually I think it does have applicability to Leica.

I do feel that they have managed to cling to some of the aspect of the tool side by continuing to build well designed and serviceable equipment. This is very difficult to do in our throw away digital world but Leica continues to try. And they continue to produce the film camera that is their stock in trade tool.

Their pricing certainly seems to place them firmly in the luxury market. But their products are still very effective tools for many.

Interesting, if you look closely at the tool market itself, very high quality, very useful, but low demand tools are never inexpensive. A Norris Infill Smoothing Plane is still quite expensive though not a heavily used tool. That does not necessarily mean they are meant only for the rich. Any demanding traditional woodworker would love to own one of these though few can afford one.

 

[YYV_146]

I am so relieved to hear that worker in Asia are not exploited.
It is a free world after all and workers have nothing to complain (Really?)
Calling them slave is wrong, they deserve respect. However, they are exploited.
I wonder what the labour movement in China would say about this.
Anyway,
Apple is number 5 in the Fortune 500 list. One of the biggest companies in the world. I think they know how to be profitable. I am not sure their success is based on luxury items.
Leica is probably on different scale.

But aren't we all exploited? I graduated at the top of my class and finished a PhD in four years. I earn some 1/5th of the typical paycheck of my old friends who went on to investment banking. Do I regret my decision? Of course not. But at the end of the day, the hands-down more skilled, knowledgeable and more social-contributive person isn't earning what he or she deserves.

I don't mean to excuse Foxconn - but Foxconn isn't the outlier here, it's the norm. Modern society is increasingly winner-takes-all, no matter where you are born.

 

[Godfrey]

I don't see much point to Seth Godin's article.
Nor to equating his theoretics with Leica—or Apple for that matter.
But then I'm not really given to a lot of that kind of navel gazing.

G

 

[Ranchu]

We that are minimally exploited benefit greatly from the near total exploitation of others. Let's not pretend otherwise, please.

 

[YYV_146]

We that are minimally exploited benefit greatly from the near total exploitation of others. Let's not pretend otherwise, please.

Comparing gains must be done at a price-to-price basis. Let me quote from the numbeo public cost of living dataset (yes, I know there are better metrics, but those aren't freely available). Shenzhen (where Foxconn is located) has a Consumer Price Index of 62 and Rent Index of 30. In fact since Foxconn is not located in downtown Shenzhen but some distance away from the city, I'd say the actual costs are a bit cheaper than that - maybe 25% cheaper. Urban Shenzhen is, according to numbeo, half as expensive as New York. This means that the $1100 Foxconn wage translates into $2930 a month in New York commodity prices, or $35160 per year.

This is income on top of the provided housing (admittedly, four-people dorm rooms) and overtime bonuses. Note that the median household income in all of New York City as of 2012 is only $57,000 or so. Considering that the vast majority of Foxconn workers are single, I'd say they aren't doing so bad. $35,000 plus free housing in NYC won't be super comfortable, but you could do a lot worse...

From a more intuitive standpoint, a Big Mac meal is $3 in Shenzhen last time I ordered one there...The same meal is $5.5+tax here. So even if they make a lot less than U.S workers, the living standard gap will not nearly be as big.

Now considering how meager my postdoc pay is, especially after adjusting for the living costs here...maybe someone is being totally exploited

 

[Ranchu]

I do hope things improve for you.

"Yu fits the profile to a T. In February 2010, she left her village in central China in order to earn money to support an impoverished family. As a leaving gift, her father scraped together about ¥500 (just over £50) and a secondhand mobile so she could call home. After a journey of nearly 700 miles, she was taken on at Foxconn. The employee handbook urged: “Hurry towards your finest dreams, pursue a magnificent life.”

But Yu doesn’t remember her daily routine as particularly magnificent. Managers would begin shifts by asking workers: “How are you?” Staff were forced to reply: “Good! Very good! Very, very good!” After that, silence was enforced.

She worked more than 12 hours each day, six days aweek. She was compelled to attend early work meetings for no pay, and to skip meals to do overtime. Toilet breaks were restricted; mistakes earned you a shouting-at. And yet there was no training.

In her first month, Yu had to work two seven-day weeks back to back. Foreign reporters who visit Longhua campus are shown its Olympic-sized swimming pools and shops, but she was too exhausted to do anything but sleep. She was swapped between day and night shifts and kept in an eight-person dormitory where she barely knew the names of her fellow sleepers.

Stranded in a city far from her family, unable to make friends or even get a decent night’s sleep, Yu finally broke when bosses didn’t pay her for the month’s labour because of some administrative foul-up. In desperation, she hurled herself out of a window. She was owed £140 in basic pay and overtime, or around a quarter of a new iPhone 5."


http://www.rawstory.com/rs/2013/08/meet-tian-yu-the-woman-who-nearly-died-making-your-ipad/

 

[YYV_146]

I do hope things improve for you.

"Yu fits the profile to a T. In February 2010, she left her village in central China in order to earn money to support an impoverished family. As a leaving gift, her father scraped together about ¥500 (just over £50) and a secondhand mobile so she could call home. After a journey of nearly 700 miles, she was taken on at Foxconn. The employee handbook urged: “Hurry towards your finest dreams, pursue a magnificent life.”

But Yu doesn’t remember her daily routine as particularly magnificent. Managers would begin shifts by asking workers: “How are you?” Staff were forced to reply: “Good! Very good! Very, very good!” After that, silence was enforced.

She worked more than 12 hours each day, six days aweek. She was compelled to attend early work meetings for no pay, and to skip meals to do overtime. Toilet breaks were restricted; mistakes earned you a shouting-at. And yet there was no training.

In her first month, Yu had to work two seven-day weeks back to back. Foreign reporters who visit Longhua campus are shown its Olympic-sized swimming pools and shops, but she was too exhausted to do anything but sleep. She was swapped between day and night shifts and kept in an eight-person dormitory where she barely knew the names of her fellow sleepers.

Stranded in a city far from her family, unable to make friends or even get a decent night’s sleep, Yu finally broke when bosses didn’t pay her for the month’s labour because of some administrative foul-up. In desperation, she hurled herself out of a window. She was owed £140 in basic pay and overtime, or around a quarter of a new iPhone 5."


http://www.rawstory.com/rs/2013/08/meet-tian-yu-the-woman-who-nearly-died-making-your-ipad/

Unfortunate and sad a story but anecdotal nonetheless. I admit I wasn't really thinking about migrant populations in general - more along the lines of local surplus labor filling in the ranks. For people that see Foxconn as the only future, I can see the scenario being much less desirable. If you are so poor to the point where a month's missed pay will result in starvation, maybe seeking short-term, less organized forms of employments would be a better idea. However sympathetic I am with her, here I don't see her as being exactly faultless. I understand that it's difficult to make good choices when you have so few options, but I also personally know people who started in the boiler room or assembly line and now lead respectable careers.

Thing is, considering that they are being paid competitively for local standards - and I believe this to be true for most workers - Foxconn has even less of an incentive to be nice to its workers. Reminds me of Wall St. , where banks seem to think they own you and can get 125 hours a week out of you because they're writing you a nice check.

One way or another, as long as those guys aren't violating local safety regulations or deliberately not paying wages, I don't see what's immoral about their conduct or about buying their products. Plus, all phones are made in the Shenzhen area these days, unless you splurge for the likes of Vertu or Porsche Design.

Edit: I'm not going to get deeper into the topic. But I don't think that using the s-word is fair in this circumstance, nor is simply labeling it "exploitation" without actually thinking about the workers' choices and situation. It's almost always a bad idea to judge the scenery by the photograph.

 

[tunalegs]

Unfortunate and sad a story but anecdotal nonetheless.

A researched article written by a journalist is "anecdotal" and then we have this wonderfully reported nugget of fact:

I understand that it's difficult to make good choices when you have so few options, but I also personally know people who started in the boiler room or assembly line and now lead respectable careers.

Sorry, couldn't resist.

 

[Roger Hicks]

...at the end of the article Godin says:

"It's possible (but unlikely) that Apple will become the first long-term cutting-edge tool maker that simultaneously exists as a profitable luxury brand."

I'd argue that Leica has achieved that. Their challenge will be to maintain it.

And indeed I'd say they always were, so they've maintained it pretty well for almost 90 years.

Cheers,

R.

 

[Roger Hicks]

Staying on topic, Leica is very much about uncompromising optical performance. But their bodies are not competitive as professional tools. A professional cares about depreciation, pro services and versatility. With the exception of the S system I think Leica offers neither.

But Leica is competitive in the sense that it has a business strategy that allows it to cater to both the enthusiast market and the luxury crowd. By maintain presence in one market it deepens its influence in the other. Go to Hong Kong and you'll see both types: rich tourist snapping X and T cameras up and experienced RF users.

That's a pretty wild and unsupportable generalization.

Depreciation? No. Any residual value in a camera is a (small) bonus. Few professionals buy and sell cameras the way many amateurs do. In fact, most that I've known don't even sell their old cameras: they keep them "just in case".

"Pro services"? You may have a modest point there but it's never deterred any of the professionals I know who use Leicas.

Versatility? Nonsense. That's a pure amateur viewpoint. A professional wants the right tool for the job, not a generic camera that can do just about everything, but can't necessarily do any of it very well.

Cheers,

R.