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A Parable for Leica?

stephengilbert

Active member
The New Yorker has an interesting piece on our current markets. "According to one estimate," it says, "Nokia has nearly twenty times Apple’s market share, but the iPhone alone makes almost as much money as all Nokia’s phones combined." http://www.newyorker.com/talk/financial/2010/03/29/100329ta_talk_surowiecki

Perhaps this kind of condition will allow Leica to thrive, or at least survive, even with a tiny market share. If they could consistently produce products that didn't have to be returned for adjustment or repair, they'd really be onto something.
 

Lars

Active member
Turn it the other way - Apple is temporarily successful with a high-margin product. Such a position is under constant attack by competitors and, in most markets, impossible to defend except by moving upmarket even more, thereby reducing market share. Apple might enjoy a good run, but competitors will relentlessly go after the high market segments.

This is exactly the process Leica went through over the last 30 or so years. The problem with the high-market strategy is that to get out of your corner you have to dilute your brand by selling products of lower perceived value. Leica has tried this over and over, yet the M series remains the core product series.

Another company in this position is Porsche - numerous attempts to move downmarket (924, 944), but few reached success (Boxster). 911 remains the core high-end product. Porsche is a very successful company, but strong growth does not seem to be a priority.

Like Leica, Porsche is a privately held company. This makes it easier to resist the temptation to move downmarket towards high-volume products. Specifically, Porsche execs have stated that they want to avoid the quarterly earnings perspective created by the US stock market, now a global phenomenon.
 

stephengilbert

Active member
I think the point of the article is that companies like Apple can survive and prosper without equaling the market share of their larger competitors. Maybe Leica can as well. Quien sabe.
 

Lars

Active member
Temporarily means not permanent. Marc I don't have to lecture you on product lifespan. From a corporation perspective, it's only been 10 years since Apple almost went under, so yep that's short term when you think of market positioning.

Usually what happens with a company with deep pockets is when growth flattens out shareholders demand the reserves to be handed out as dividends. Apple eventually needs to keep turning its reserves into growth to keep its shareholders content, and you know what they say about growth - it's temporary.

Stephen Apple is a giant not an underdog hardly has any larger competitors - HP, Dell?

Guy that's your hard-earned cash in Apples pockets. If you're like me you thought long and hard about buying Apple stock in 2002, and decided not to.
 
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fotografz

Well-known member
Temporarily means not permanent. Marc I don't have to lecture you on product lifespan. From a corporation perspective, it's only been 10 years since Apple almost went under, so yep that's short term when you think of market positioning.

Usually what happens with a company with deep pockets is when growth flattens out shareholders demand the reserves to be handed out as dividends.

Stephen Apple is a giant not an underdog hardly has any larger competitors - HP, Dell?
Yep, no lecture needed :)

Product lifespan is old think in a brave new world of game changing innovation. The only time Apple got into hot water was when they forgot that. Solution? Bring back the innovation wizard to restart the engine.

Besides, I can't even think of a product in the technology sector that has a permanent lifespan. It's publish or perish.

Something is working ... with tumble weeds blowing through all the Malls here ... the Apple store is standing room only from 10AM to 9PM every day.:salute:


-Marc :)
 

jonoslack

Active member
The New Yorker has an interesting piece on our current markets. "According to one estimate," it says, "Nokia has nearly twenty times Apple’s market share, but the iPhone alone makes almost as much money as all Nokia’s phones combined." http://www.newyorker.com/talk/financial/2010/03/29/100329ta_talk_surowiecki

Perhaps this kind of condition will allow Leica to thrive, or at least survive, even with a tiny market share. If they could consistently produce products that didn't have to be returned for adjustment or repair, they'd really be onto something.
HI Stephen
Well, I don't deny that things do need to go back to Leica - I'm afraid it's part of the game with things like the mechanical rangefinder.
However - for one reason or another I've been 'involved' in several returns recently (not all mine) - the story seems to be that whereas a few years ago we were talking several weeks at best, turnaround times are now really quick and efficient (I'm speaking of Solms, don't know about NJ).

Lars
What success isn't temporary? Seems to me that the obvious similarity between Leica / Apple / Porsche is not so much the high cost, but the fact that they are not insulting their customers by making products redundant in a few months.
By hanging on to a design continuity they encourage users to hang on to their product without feeling that it's immediately out of date - this, in turn, has a big effect on secondhand values and makes it more likely that people will return for more . . . . quite the opposite of 'product lifecycle' in fact.

I'd like a bit of the kind of 'temporary' that Apple represents too!

all the best
 

roanjoh

New member
I still think that Apple is aggressively cutting prices on their products to compete with their PC counterparts - so for a few more hundred bucks, a customer might be easily persuaded to go with Apple and pay a bit of a premium for better design.

Not so with Leica where it's prices are astronomically higher than other 35 mm digital cameras in the market (Leica is almost eliminated from the equation when somebody is in the market for a 35mm digital camera - unless that person is dead set on getting a Leica). Unlike Apple, Leica also is not aggressively competing in terms of technological advances (LCD screen, battery management, processor speed etc). Sure they put a full-frame sensor inside the M9 - but on an outdated M8 spec-ed body? Of course the m9 is successful - but how much more successful would it be if the innards were improved?
 

fotografz

Well-known member
I still think that Apple is aggressively cutting prices on their products to compete with their PC counterparts - so for a few more hundred bucks, a customer might be easily persuaded to go with Apple and pay a bit of a premium for better design.

Not so with Leica where it's prices are astronomically higher than other 35 mm digital cameras in the market (Leica is almost eliminated from the equation when somebody is in the market for a 35mm digital camera - unless that person is dead set on getting a Leica). Unlike Apple, Leica also is not aggressively competing in terms of technological advances (LCD screen, battery management, processor speed etc). Sure they put a full-frame sensor inside the M9 - but on an outdated M8 spec-ed body? Of course the m9 is successful - but how much more successful would it be if the innards were improved?
How much more successful can the M9 be? The backorders are only now getting filled ... very slowly.

Outdated is your perspective ... not mine. You can keep all the bells and whistles IMO. I'm sick of them on all my other cameras. KISS please.

Okay, maybe a stop more ISO. :D

-Marc
 
M

Mango

Guest
All the Apple products I have seen are Made In China. The quality, fit and finish, is superb; probably better than could be made in the US at that volume.

Perhaps Leica should consider China as a way to lower manufacturing costs?
 

Lars

Active member
How much more successful can the M9 be? The backorders are only now getting filled ... very slowly.
Success or bad planning? Any sales exec loves to say that demand exceeds expectations, but that doesn't mean much by itself. Leica reps have said the same thing about S2 sales.

Real numbers in terms of product revenue would be more relevant.
 

roanjoh

New member
How much more successful can the M9 be? The backorders are only now getting filled ... very slowly.

Outdated is your perspective ... not mine. You can keep all the bells and whistles IMO. I'm sick of them on all my other cameras. KISS please.

Okay, maybe a stop more ISO. :D

-Marc
............ and a high-res screen for the chimpers!!! :D Is that too much to ask for Leica??
 

roanjoh

New member
All the Apple products I have seen are Made In China. The quality, fit and finish, is superb; probably better than could be made in the US at that volume.

Perhaps Leica should consider China as a way to lower manufacturing costs?
That would be the day.........!!!
 

PeterA

Well-known member
Cheap isnt somethign that rates highly in my decision making tree - for anything... Price says nothing about Value.

People either get this or they dont.
 

Lars

Active member
Cheap isnt somethign that rates highly in my decision making tree - for anything... Price says nothing about Value.

People either get this or they dont.
That's just irrational. Ask any economist or consumer on the planet - everything else being equal, lower price is better. People either get this or they don't. ;)
 

PeterA

Well-known member
Lars there is nothing irrational about different shapes to indifference curves or differentiated utility curves - clearly ours differ - but that doesn't make me irrational - it just makes you different to me. -:)

Regarding the difference between price and value - well that is how I make my living - arbitrage every day now for a couple of decades - umm started about the time I finished my Doctorate ..in ..( you guessed it ) - economics. -:)
 

Dale Allyn

New member
That's just irrational. Ask any economist or consumer on the planet - everything else being equal, lower price is better. People either get this or they don't. ;)
True, but the sticking point is "everything else being equal". Both objective and subjective evaluations pertain, and some "detractors" might try to dismiss the latter, but it's inappropriate in comparing value – both perceived and real.

A $14 Casio watch will keep time more accurately than a $14,000 Jaeger-LeCoutlre, but some may feel that there is more value in a carefully crafted timepiece vs. a mass-produced, stamped-out plastic-coated mechanism for keeping time. Both allow one to make it to the bus stop on time, but there is a difference in perceived value, as well as market potential, market share, appreciation, etc.

My remarks are off-topic, but when it comes to "value" and personal demarcation of same (with regard to consumer goods), one is well-served by appreciating that each of us has a different scale by which we measure such things. For example, I recognize that I get much better "value" by buying Apple's computer offerings (when one buys very carefully, buys RAM from other resources, etc.) than do my Windows-buying (mostly Dell's) colleagues. The funny thing is that my colleagues are mostly feeling the same way lately. Several are very, very geeky and have always built their own machines; program comfortably in a staggering list of languages, etc.; but due to issues beyond the topic here, are adding Macs and slowly migrating. My point is that there is more than one way to evaluate "value".

:)

Apple's success IS mostly recent, in that we've watched it grow during the past 10 years (I bought AAPL at $14 after their deep slide). But we have also watched them transform from a computer company to a consumer electronics company to a cell-phone vender to a... Apple has no debt, billions of dollars of cash, and most importantly, innovation (or at least, effective marketing). Most of the other big names specialize in polishing feeding troughs for lemmings. That is a seriously successful business model, but it also allows room for niche players and those who will to press against the norm.

Nokia and Microsoft do not sit idle, but neither do Apple. My point is not to tout Apple, but to remind us all that neither side of any competition sits idly taking punches and not adapting. Nokia will move, MS will move, Apple will move... He who sits by, guarding his chips, will be flanked by more than one competitor.

Cheers
 
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