Leica Camera: A “Boutique” Firm Faces A World of Change
The Leica
The Leica originated in the early 20th century by the German microscope builder Ernst Leitz GmbH. Before handheld models, still cameras were large, expensive and heavy equipment that required a tripod for use. The image was printed on glass covered with silver bromide, and the size of the result could not be changed. But in the 1920s Leica created its first mass-market handheld-sized camera, the Leica I model. It recorded the image onto a 35mm negative that could then be enlarged upon development. This innovation was revolutionary, creating a new product for use by ordinary people, photography no longer needed to be done by professionals.
Throughout the 20th century, the company went through several ownership transitions, merges and name changes. In 1986 the Wild Leitz group was created to take care of the camera segment. In 1990, Wild Leitz merged with the British optical group, and former CFO Klaus-Dieter Hormann was responsible for buying out the camera divisions, calling it Leica Camera AG. In 1996 the company went public on the Frankfurt Stock Exchange.
Great photographers around the world used their products. Robert Capa used the Leica 35mm to shoot his famous “Death of a Loyalist” image. Famous photographer, journalist and artist Henri Cartier-Bresson was a loyal supporter of Leica 35mm cameras and used the equipment to photograph Mahatma Gandhi’s funeral in 1948, cover the Chinese Civil War, among others. The famous image of a Vietcong girl running from the Napalm attacks during the Vietnam War was also captured by a Leica model M2. Even Queen Elizabeth used the brand’s products.
Digital photography, a new paradigm
The digital photography revolution began in the 70’s with the creation of electronic circuits that allowed the detection of light and the first digital camera was created by Kodak in 1975. With this new technology, digital photography began to become popular. A great leap forward took place in the 1990s with the arrival of the first personal digital cameras and cell phones that contained built-in digital cameras. In addition to the popularization of photography, this digital technology made possible several other applications such as: diagnostics in medicine and advanced scientific research.
In 2006 Nikon announced that it would stop producing analog film for cameras. Photography professionals realized that there was no turning back. Photographer Mark Greenberg commented in The Washington Post at the time: “…film is done. Digital rules the world now” (2006).
At the beginning of the 21st century, the digital transformation was drastic and dramatic for companies in the sector: these changes were very fast. The pattern of consumers were transitioning, and the companies needed to position themselves at a fast pace to keep up with all these changes.
Leica SWOT Analysis
SWOT Analysis is a tool that allows the company to analyze and synthesize environmental scenarios, whether internal or external, through their strengths, weaknesses, opportunities and threats. It helps organizations gain an understanding of the factors involved in making a business decision.
Leica Strengths
- Product Quality
- Highly Skilled Employees
- Almost a Century of History in the Segment
Leica Weaknesses
- Price Range
- Need of High-End Technology to develop and manufacture its product
- Resources to Invest in New Technologies
Leica Opportunities
- Strong Distribution Network
- Strong Brand in the Market
- New Trends In The Consumer Behaviors (Digital Photography)
Leica Threats
- New Trends In The Consumer Behaviors (Digital Photography)
- Strong Competitors in the same segment
In the SWOT analysis of Leica, the item “New Trends In The Consumer Behaviors” was considered both an opportunity and a threat. When a new disruptive technology appears on the market that tends to be enduring, or even replace the old technology, this characteristic should be considered as both.
Leica’s main strategic positioning
As Leica emerged from the microscope industry, the company had a lot of expertise in the manufacture of glasses and lenses and always valued quality, developing “the best lenses that money can buy”. A Leica lens had more than 100 parts and the precision of the processes required very skilled workers. Which naturally defined the company’s positioning in high-end products with above-average prices.
In 1959, the Japanese company Nikon released its Model F, a camera widely used by photography professionals covering all kinds of events in the 1960s, from artistic to journalistic. The model was “single lens reflex”, also known as SLR or “Reflex”. This revolutionary concept has only one lens where what is seen by the photographer is the same as what goes into the frame, in addition to the motorized system that allowed a rapid-succession of shots with little lag. In 1964, to compete with the new Nikon models, Leica had to launch its own model of SLR or Reflex camera, which was called “Leicaflex”. Subsequently, the model evolved into the R series, which was consolidated in the market as a quality reference for the next decades by both amateur and professional photographers.
An important positioning should be taken by the brand at the end of the 20th century. The R-series camera lineup had high-end lenses that its customers loved. But the digital revolution was already happening. Leica was a small company, and did not have the resources to maintain a high-end line of lenses while investing more aggressively in a line of digital cameras. And there was no certainty that loyal customers would trade their analog cameras for a new digital one. A trade-off was necessary. For philosophical and traditional reasons, Leica continued to produce and insisted on its SLR cameras, with the R8 and R9 models from 1996 until 2009, when the photography world had already switched to digital photography.
In 2004, Leica was saved from bankruptcy by the new management of Andreas Kaufmann. Providing the necessary capital the company needed at the time, Kaufmann was committed to transitioning the company’s former success into today’s digital world.
Leica’s big announcement at the 2008 Photokina fair was the launch of its new M8.2 model, a digital system and upgrade of the M8 model that had been launched at the same fair two years before, that had some defects that were not well accepted by the their customers, including difficulties in processing the infrared range. A problem that could only be resolved when the brand sent 4,000 new filters to customers plus an apology letter.
In 2021, the company had more than 400 employees in Germany, many of them in its assembly line. And today, more than 90% of its revenue comes from digital products.
Conclusion
The beginning of the 21st century was not very kind to the brand. Despite having developed its first digital cameras back in the 1990s, After it took a while to recognize the change that was taking place in its industry, the company failed to see its future in digital photography.
The brand’s image in the market, the quality of its products and decisions, although a little late, but correct, helped in the survival of the company, which until today is recognized as an iconic brand by photographers and enthusiasts, both amateurs and professionals.
References:
Admin, P. R. (2020, May 19). More scary graphs of the state of the camera industry. Photo Rumors. https://photorumors.com/2020/05/18/more-scary-graphs-of-the-state-of-the-camera-industry/
Musgrove, M. (2006, January 12). Nikon Says It’s Leaving Film-Camera Business. Washington Post. https://www.washingtonpost.com/archive/business/2006/01/12/nikon-says-its-leaving-film-camera-business/adeaa6a1-f0d3-4429-9803-32268444aba7/
Our History. (2022). Leica Microsystems. https://www.leica-microsystems.com/company/about-us/our-history/
Pearce, J., & Robinson, R. (2014). Strategic Management (14th ed.). McGraw Hill.
Trenholm, R. (2021, May 31). History of digital cameras: From ’70s prototypes to iPhone and Galaxy’s everyday wonders. CNET. https://www.cnet.com/tech/computing/history-of-digital-cameras-from-70s-prototypes-to-iphone-and-galaxys-everyday-wonders/
