For many companies, losing 7.5% of your workforce would typically be bad news, perhaps an indication that profits are falling. This is not the case at Leica; in June last year, it announced that sales had increased for the fifth consecutive year. So, why is Leica doing so well when other camera companies are seeing their figures nosedive, and why is it reducing its number of staff?
Leica is making some significant changes to its company, announcing that it will be making up to 100 of its 800 employees redundant and hiring 40 software experts in their place. Leica appears to be following in Canon in shifting how the company innovates, giving us further insights into how the camera industry is changing.
In April, I suggested that the industry had reached peak-ILC in terms of hardware: the market for ILCs (interchangeable lens cameras) is saturated, the explosion of camera phones is having an impact, and research and development will be shifted more towards software innovations rather than hardware.
As reflected elsewhere across the industry, Canon’s recent sales figures are worrying, and the company expects the market to contract for the next couple of years. As a result, Canon announced that it would be shifting resources to focus more closely on business-to-business markets and developing more products for automotive and industry uses.
Leica is also responding to peak-ILC. The Leica Q (Type 116), the company’s fixed-lens, full-frame camera for those with deep pockets, has proven to be an unexpected success. The Q-P, the same camera with the Leica badge removed but at the added cost of a couple of hundred dollars , is an indication of its popularity, as is the fact that the Q’s successor, the Q2, has just been released, less than four years after the original. Just shy of $5,000, there are plenty of better options if you want value for money, so why is Leica doing so well with these hugely expensive, extremely limited cameras?
Firstly, this is a fixed lens camera. Though of course it can be used as such, this is not a functional, versatile tool like a DSLR or a MILC. This is a luxury, niche product that is not threatened by smartphones and market saturation. If you offered me a choice of any Leica camera for free, I’d pick the Q2, and I suspect many other photographers would choose the same, preferring something that is different to their haul of ILCs and huge lenses. But more than that: I don't secretly crave a Leica because Leica has a record of pioneering technological innovation; instead, I want it because of its sense of refinement.
Secondly, and more importantly: branding. No other camera company has Leica’s prestige. No one buys a Sony or a Canon because they feel the allure of a giant, bland, faceless, unreachable, multinational corporation, however much their ambassadors strive to make them seem warm and cuddly. There’s a reason why Leica has launched so many stores around the world (there’s 82 of them) and why Lenny Kravitz is all over their marketing.
I suggested in April that the move to mirrorless might be the last dramatic hardware evolution for the foreseeable future and that companies will start to shift their focus to include more software innovations, as seen in features such as eye autofocus. Leica’s changes to its staff is perhaps another sign of this. Speaking to the German newspaper Mittelhessen (German text, free to read, but requires registration), Leica CEO Matthias Harsch describes the camera industry’s “second digital revolution,” suggesting that software is now as important as hardware. Lens engineering is not being forgotten, however, with Harsch promising millions of euros of investment to ensure that their optics remain some of the best in the world.
Please let me know your thoughts in the comments, particularly as to whether Leica’s partnership with Chinese tech company Huawei threatens to undermine its status.