Leica T is out, but for who?

Started Apr 24, 2014 | Discussions thread
Zvonimir Tosic
Zvonimir Tosic Senior Member • Posts: 2,635
Understanding the real price of your camera

To understand the present, you must first understand the past.

Why are Japanese cameras cheaper?

After the WWII, Germany was stripped of all its intellectual property, its industrial and technology patents made void. It was devastating to German companies who have totally lost momentum, and it created a huge bonanza for manufacturers elsewhere (particularly in the US and Japan).

Many of (then) smaller Japanese companies had actually been repair shops before the war, and were familiar with the construction of the cameras, and most had experience fabricating hard to get parts.

The economic boom following shortly after made Japanese into de-facto holders of 95% of world's photography related patents today. Which Leica must pay for through the nose in various forms, of course, being such a small manufacturer from Germany. When buying any component, because of its small purchasing power, Leica pays many times *more* for same parts than some Japanese camera company.

Once your legacy has been given to others for free and to use as they please, it is hard to start anew.

Economy of scale that was the result of economic boom, enabled Japanese to optimise production in ways unimaginable to small players, reduce prices for components and produce hundreds of millions of system cameras. Sensor wise, they now control the world market and license rights and technologies. So from that perspective — pure sensor’s ability to capture image — Leica can give nothing extra. You may say, “it is mediocre”. Or in film terms, "My camera uses same Kodachrome as yours — what's the difference then"?

The difference is in that they are willing to offer choices and quality in other parts they can influence and do not necessarily pay royalties for. However, does it mean own investment must not be amortised? What one does not pay in royalties to others, must pay in own development. But additions and uniqueness is designed to add value. Those are the new lenses, proprietary imaging and UI software, processing, better warranty, better resale value, also special attention to details and materials in construction of the camera. Little things that add up.

Paying a bit more also has a positive psychological effect; it is more likely a person will use and enjoy the equipment in a more considerate and conscious way, take extra care and think of it as a long-term investment.

Being small means living dangerously

Component manufacturers have different price lists for different players with different buying power. For example, Leica was forced to use Kodak, then Aptina as the source of their FF sensors because they cannot get a deal with Sony — too much $ to pay for a premium product and not enough buying power to reduce that cost.

Leica cannot make enough of FF sales to accept such terms and therefore they have invested into the crop sensor mirrorless T Type concept, that will enable them gain more crop sensors buying power in the future, used across a few lines of products. That lowers the cost for new products and enables faster turnaround, to pace itself favourably with sensor tech development.

A real cost of the camera and lenses

When comparing prices directly, you are talking about economy of scale and deliberate loss some companies are willing to take.

To Olympus, camera business is in loss for years. Buy Olympus does not care much, as their primary business is not photography. They use it as an offset research facility for other profitable ventures of theirs.

Remember the $1800 tag for Fujifilm X-Pro1? That was a realistic price for a new camera with some profit component in it. Now Fujifilm sells cameras at the cost price or less and making no profit so it can make some through the lens sales, but which is nullified through distribution and marketing cost. However, in reality, they don’t care: camera business operations is less than 3% of their activities.

Sony's cameras are same trouble for them, but they get profits from the sensor manufacturing business which is blooming. Pentax and Ricoh apparently make some profit in camera and lens sales, but they don’t care either: their camera business is about 1% of Ricoh’s total operations.

Canon makes profits as well, but not as big as few years ago. Luckily, photography is not everything they do, and they have so many patents used across different industries. Nikon is rapidly losing profits, as their only “egg basket” is photography — all other players play some other acts beside photography business. Or, they have eggs in many baskets.

Who is crazy, actually?

So when you compare the prices, and finally (hopefully) understand that in the whole of camera manufacturing industry 80% of players are consciously and actively losing money on it, are selling products that cannot be sold realistically or sustainably at such low prices, that the whole industry is in fact an economic farce — how much makes sense to condemn or ridicule one small company that manufactures and sells by the manufacturing and marketing book rules?

One that says that a company must also pay taxes on profit, taxes that support functioning of the health system, social services, childcares, etc.

When you consider an answer, please tell,

(1) what values are you comparing actually?,

(2) what business model do you really condemn?, and

(3) which business model and attitude is sustainable, and can ensure healthy future development of the traditional camera industry?

-- hide signature --

Madamina, il catalogo è questo; Delle belle che amò il padron mio; un catalogo egli è che ho fatt'io; Osservate, leggete con me.

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