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A Parable for Leica?

Lars

Active member
Nah, I still say your statement is irrational (tongue in cheek) But this is not an economics forum so perhaps we should leave it at that.

I have to say, though, that Leicaphiles can be very creative in rationalizing purchase decisions. (This is the Sunset bar, so Leica-bashing is OK.)
 

jonoslack

Active member
Nah, I still say your statement is irrational (tongue in cheek) But this is not an economics forum so perhaps we should leave it at that.

I have to say, though, that Leicaphiles can be very creative in rationalizing purchase decisions. (This is the Sunset bar, so Leica-bashing is OK.)
Absolutely they can be creative in rationalizing purchasing decisions (we can, I can). Just like Porsche Drivers, Apple users and Jaeger-LeCoutre owners. Which really does prove Peter's point doesn't it? :)
 

Lars

Active member
Absolutely they can be creative in rationalizing purchasing decisions (we can, I can). Just like Porsche Drivers, Apple users and Jaeger-LeCoutre owners. Which really does prove Peter's point doesn't it? :)
Nope.

Peter's statement indicated that he is indifferent to pricing. I don't think he is but that's what his statement indicated.
 
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jonoslack

Active member
Nope.

Peter's statement indicated that he is indifferent to pricing. I don't think he is but that's what his statement indicated.
He didn't say he was indifferent, he said:

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

That doesn't indicate indifference, simply that it isn't his first priority. He certainly implied that he is interested in Value.
 

Lars

Active member
This is silly bickering over semantics and I apologize for that... but I can't help myself :(

"Price says nothing about value." It's right there - no relationship between price and (perceived) value. That statement is only rational for someone with unlimited resources. For the rest of us, value relates to what you get for your money.
 

fotografz

Well-known member
Actually, I find this whole subject very interesting ... both sides of the coin in the discussion. Short text bytes hardly scratches the surface.

I am revamping my whole marketing structure for selling my photography, and for a variety of reasons the hardest part was setting prices in today's marketplace. I posed some questions regarding pricing on a Pro forum I use, and the flurry of opinions was very interesting reading.

IMO, the term "Value" is a very relative word and depends on context. An extreme example could be a $2 million piece of medical equipment that could save lives. Value is obvious, and price is no object.

To use Lar's example of Leica ... one need not be the Sultan of Brunei or Peter A ;) to place a priority on such expensive gear. Priority suggests that there is a hierarchy of perceived value based on personal experience/want/need/desire. Someone may be willing sacrifice this or that, in order to have this. Those unwilling to make those sacrifices may think it is rationalizing what they think is an irrational decision ... meaning it is irrational by their standards of evaluation. So, value is far from being empirical, and is a personal thing at best.

I place a very high value on my M9 system and made some serious sacrifices to build it because in semi-retirement I do not have unlimited resources. Based strictly on a business model, it would be difficult to rationalize that level of expenditure. However, other value factors come into play here ... like the effect that a rangefinder has on my work as evaluated by my creative criteria and personal vision, and the fact that this camera is unique as are some of the lenses ... added to the subjective opinion regarding IQ.

Conversely, I could not bring myself to make the sacrifices to move to the Leica S2. Even if all the perceived value factors lined up perfectly, which for me they do not, it still would not be worth the sacrifices ... notably being unable to build the M9 system. Having settled my pricing irritation with Hasselblad, I choose to cancell my order for a H4D/60 and move to the H4D/40 instead because it is the rational thing to do considering my current work needs and a shift in my photographic offerings for sale. Meaning it has more value based on my criteria.

-Marc
 

PeterA

Well-known member
These discussions are indeed interesting - they deal with the real world of human preferences..

I imagine that everyone can find something in their home which they would find difficult if not impossible to put a price on - so high is the value to them. And yet to someone else that very same object may be so 'worthless' that they would not buy it any price - perhaps the object may be a photograph of a relative or a now past away favoured pet...or something as obscure as a piece of paper with some barely legible writing on it - and the feint remainders of a lipsticked kiss or a trace of perfume ...

If you can think of an example like this - then you can understand that price does not equate to value when it comes to personal preferences.:thumbup:
 

Lars

Active member
Back to Leica compared to Apple: I can see how a discerning buyer would see some parallels but in all honesty the two companies are quite different, as are their product offerings and market strategies.

Apple's fortune is based on innovative market strategies combined with clever product innovation and positioning. Recently the company has moved more and more towards recurring revenue mass markets - music, mobile phones, and now ebooks. Part of the success with recurring revenue - subscriptions - is that it allows for subsidized product pricing. Phones is an obvious example. Add to that the product design that Apple does so well and you have a recipe for market success.

It's also interesting to note that with a subscription model, product lifespan becomes less of an issue - over here people swap phones every 12 months, with a suscription model the actual device cost is hidden in the monthly fees.

Back to Leica: Its product philosophy is based on no compromises, product lifespan is counted in decades, customers often consider their purchase of a Leica product an actual investment (and often rightly so).

So, for Leica the purchase barrier is extremely high, products have a more or less unlimited lifespan (except for the recent digital bodies which arguably become outdated far sooner than their build quality would suggest).

I'm not sure where to go with this.. the companies are at the core so very different, with Apple being the wizard at approacing a mass market with high margins whereas Leica operates at little or no profit and couldn't care less about reaching a broad market.

So while there is something to learn from the article that Stephen originally linked to, I don't think it would help Leica much.
 

roanjoh

New member
Lars - I completely agree with your observation between Leica and Apple. Apple used to be very similar to Leica, it wasn't until recently when they started opening the flood gates (iTunes on PC, iPod on PC, Windows on Mac) that more consumers made the swap and they gained a bigger following.
 

Dale Allyn

New member
... Apple used to be very similar to Leica, it wasn't until recently when they started opening the flood gates (iTunes on PC, iPod on PC, Windows on Mac) that more consumers made the swap and they gained a bigger following.
Hence the increased "Value Proposition" for some.

;)

One point Lars raises is that for Leica "...product lifespan is counted in decades, customers often consider their purchase of a Leica product an actual investment (and often rightly so)", and that was sure the case in an analogue world, but this may change in the digital age. Of course, I'm referring to bodies, sensors, etc. here, but it may suggest that Leica will need to continue to adapt, just as Apple has.
 

bensonga

Well-known member
"Price says nothing about value." It's right there - no relationship between price and (perceived) value. That statement is only rational for someone with unlimited resources. For the rest of us, value relates to what you get for your money.
I'm no economics expert....but I'd have to disagree. I don't think there is a necessary connection between price and actual (or perceived) "value"....however that might be measured or determined. I think that's what Peter was implying in the phrase "says nothing about value". The lowest priced item isn't necessarily the one with the highest value....even for those of us with limited resources.

I can imagine a scenario in which 2 items which are supposed to do the same thing or have the same function, might have very different objective capabilities and prices. Suppose item 1 costs 20% less than item 2, but item 1 only delivers 50% of the necessary function/capability as item 2 (on whatever objective scale of measurement is appropriate). Or perhaps the expected life of item 1 is one-half of item 2.

I would say that item 2 is the better value, even though it costs more than item 1. Of course, you could also factor in non-objective (but nonetheless important) measures of functionality too.

Gary
 
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jonoslack

Active member
I'm not sure where to go with this.. the companies are at the core so very different, with Apple being the wizard at approacing a mass market with high margins whereas Leica operates at little or no profit and couldn't care less about reaching a broad market.
Well, I have some sympathy with the rest of your post. However, do you KNOW that Leica are making no profit on:
M9
Noctilux
21 f1.4
24 f1.4
50 f1.4

I confess that I don't know, but considering that they can sell all they can make (and how expensive they are) it would be very odd if they weren't making profit on these items . . .

As for Apple . . . We develop software for business users who use windows, but we use Macs in the business - a good reason why has just happened - one of our 17"MBP computers has had an obscure problem which corrupts files (of course it shouldn't). Having identified this, a quick trip to the Apple store, a prebooked appointment with someone who knows what they're talking about and a soak test means that 4 hours after the problem has been noticed a motherboard problem has been diagnosed and being fixed. The amount of aggravation this kind of service relieves is worth every penny of the price of entry . . . we were talking about value?
 

Terry

New member
Lars- Perhaps in Sweden the iPhone is still upmarket. The use of iPhones in the US is huge and from observation not just from people who buy upmarket. It was reported in the last few days that the web useage on smart phones is dominated by the iPhone with a 50% share. To me, Apple has created a different phone/internet experience. I am willing to bet they will add to that with the iPad starting next week.
 

Lars

Active member
Lars- Perhaps in Sweden the iPhone is still upmarket. The use of iPhones in the US is huge and from observation not just from people who buy upmarket. It was reported in the last few days that the web useage on smart phones is dominated by the iPhone with a 50% share. To me, Apple has created a different phone/internet experience. I am willing to bet they will add to that with the iPad starting next week.
iphone is mid to upper market here - some features missing, like a useable camera and decent sound quality, and the closed ecosystem is not liked by everyone. Pricing is through the roof as always with Apple products.

As for the 50% web user share, is that number of devices or traffic volume? I would guess the latter. Sometimes you see some really weird numbers, it's important to understand what's actually measured.

Here people tend to use mobile broadband a lot as well, so the mobile internet experience comes in many more flavors than phones. Latest 4G USB modems available now were benchmarked at 90+ megabits/sec the other day. Prepaid 3G modems are cheap and fast, $10/week or $35/mo. Many have left wired connections completely, use mobile broadband at home.

Re your own experience with iphone, I would say that Apple took the US out of the dark ages on the mobile side with the 3G - you guys were a bit behind the curve there for years (no offense meant but it's reality), still are in some respects. Over here the iphone was certainly a new direction but without 3G and MMS on the first gen it was outdated the day it hit the stores (wasn't actually officially sold here for that reason). When the 3G was launched by local operator Telia, people were actually hired to stand in line outside, to make it seem more popular than it was. This of course just fed the perception that Apple is all about hype. The latest gen is pretty good but by now the alternatives are many, the novelty factor of the UI is no longer there.

iphone is actually a good example of Apples challenge to constantly innovate. Many people here see Android taking over over the next few years. As operators get lower-priced alternatives to attract customers with, Apple's market share will diminish. Thus the ipad as a possible new platform to sell media and apps. However Android will kill there too - we already see $150-200 Android tablets and a lot of Chinese companies will sell sub-$100 tablets after the summer. So while Apple is an amazing profit machine, each product category (desktop, laptop, ipod, iphone, ipod) has its high profitability run that is limited in time to a few years. If Apple stops innovating then the shareholders will demand their share of the huge war chest.
 
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