Latest / The CEO Diary with Fexingo: Leadership Lessons, Executive Decisions, and Corner Office Stories / How Leica Defied Digital Disruption
Transcript
- Lucas: Luna, when was the last time you bought a dedicated camera — a standalone camera that wasn't your phone? Luna: Honestly? I think it was a point and shoot for a trip to Japan in 2015. And I barely used it after the first day. My iPhone took better pictures in most situations. Lucas: Right, and that's basically the story of the entire camera industry over the past fifteen years. Smartphones ate the low end, then the middle, and eventually most of the high end too. Canon and Nikon's compact camera sales collapsed by something like ninety percent. But there's one company that somehow came out of this disruption stronger — and it's a hundred-year-old German optics company that sells cameras starting at five thousand dollars. Luna: Leica. Lucas: Leica. And the reason I want to talk about them today is because their strategy is almost a textbook case of how to survive — actually thrive — when your entire category gets disrupted. They didn't try to compete with smartphones. They didn't make a cheaper camera. They did the opposite. Luna: They went upmarket. But that's easier said than done when your market is shrinking. How did they pull it off? Lucas: Well, let's start with the low point. In the early 2000s, Leica was in serious trouble. They'd been through a period of mismanagement, the product lineup was stale, and the digital transition was brutal. By 2004, they were losing money, and the brand was close to being remembered as a relic — great glass, but a company that missed the digital revolution. Luna: I remember reading that in 2005, they almost went under. And then what? They got bought by a private equity firm, right? Lucas: Yes, ACM Capital, a German investment firm, took a controlling stake around 2005. And they brought in a new CEO, Josef Spichtig, who basically said: we're not going to try to be Canon. We're going to be Leica. That meant focusing on the core rangefinder system — the M-series — and making it digital. The Leica M8, launched in 2006, was a flawed camera by most technical measures. But it had that Leica look, that build quality, and a price tag of nearly five thousand dollars. Luna: And people bought it. Not in huge numbers, but enough. Because for a certain kind of photographer, nothing else felt the same. Lucas: Exactly. And that's the seed of the strategy. Leica understood that they weren't selling a tool for taking snapshots. They were selling a tool for a specific kind of photography — deliberate, manual, considered. The M-series forces you to slow down. You're focusing manually, you're composing without a lot of automation, and the images have a distinctive character. That became the brand's moat. Luna: But they also needed volume to keep the company viable. You can't survive on ten thousand units a year of a five-thousand-dollar camera, right? What did they do? Lucas: They did two smart things. First, they expanded the product line within the premium segment. The Leica Q, launched in 2015, was a full-frame compact camera with a fixed 28mm lens. It was simpler, more approachable, but still cost over four thousand dollars. And it was a hit. Suddenly, Leica had a camera that appealed to people who wanted the Leica experience without the complexity of a rangefinder. Luna: And the second? Lucas: Partnerships. Leica started licensing its brand and optical expertise to other companies. The most famous is the partnership with Huawei, starting around 2016, where Leica co-engineered the camera modules for Huawei's P-series phones. That was controversial — some purists said it diluted the brand. But strategically, it was brilliant. Luna: Because it put the red dot — the Leica logo — on millions of devices. It made Leica aspirational for people who would never spend five thousand dollars on a camera. And it also generated revenue and technical insights. Lucas: Exactly. The Huawei partnership reportedly brought in tens of millions of dollars in licensing fees and helped Leica stay current with digital imaging processing. They also partnered with Panasonic on some of the technology for their mirrorless cameras. So Leica could focus on what it does best — optics and industrial design — while leveraging partners for the digital components where they were weaker. Luna: And the results show. Last year, 2025, Leica reported revenue of over four hundred million euros, which is roughly double what they were doing a decade ago. And they're profitable. Lucas: Yeah, they've been profitable consistently since about 2010. And the interesting thing is, their margins are enormous. A Leica M11 body costs around nine thousand dollars. The lens for it can be another five to eight thousand. The gross margins on those products are likely seventy percent or higher. So even though they sell maybe fifty thousand cameras a year globally — compared to Canon's millions — they're a very healthy business. Luna: But it's fragile, isn't it? I mean, their whole strategy depends on maintaining the perception of scarcity and craftsmanship. If they ever over-produce, or if the quality slips, or if the heritage feels manufactured, the brand could unravel very fast. Lucas: Absolutely. And that's a tension they've managed carefully. Under the current CEO, Matthias Harsch, who took over in 2020, they've been very deliberate about not flooding the market. They keep production volumes constrained. The Leica M11 had supply shortages for months after launch. Some people say that's just limited capacity. But I think it's also a deliberate strategy to keep demand high. Luna: And they've also avoided the trap of trying to be everything to everyone. They have three main camera lines now: the M rangefinder, the Q compact, and the SL mirrorless. That's it. Three product families. They're not making entry-level DSLRs or budget mirrorless cameras. They're not competing with Sony or Fujifilm on specs. Lucas: Right. And that focus is really the lesson here for any business facing disruption. The instinct when your market is being eaten is often to broaden your appeal — make a cheaper version, add more features, try to beat the disruptor at their own game. Leica did the opposite. They narrowed their appeal to the most committed customers and made the product even more specialized and expensive. Luna: It's a counterintuitive playbook. But it works when you have a genuinely differentiated product and a brand that people are emotionally attached to. You can't just decide to become Leica if you're a commodity camera maker. You need the history, the craftsmanship, the mystique. Lucas: Exactly. And that's something we talk about a lot on this show — the difference between a brand and a commodity. Leica is a brand in the truest sense. People buy it for identity, not just function. And as long as they protect that, they're essentially immune to the kind of disruption that killed Kodak and Polaroid. Luna: Speaking of brands that people are emotionally attached to — I think a lot of our listeners come to this show because they're trying to build that kind of attachment for their own products or companies. And if these conversations have moved your work forward in some small way, I want to mention something. Lucas: Go ahead. Luna: We deliberately don't run ads on these episodes. No sponsors, no pre-rolls, no mid-roll interruptions. That's a choice we made from day one because we wanted the show to feel like a conversation, not a commercial. And the reason we can do that is that some listeners choose to support us directly. Lucas: Yeah, and it's really simple. If you've gotten value from The CEO Diary — maybe a strategy idea you applied, or a leadership insight that changed how you think — and you want to help keep it ad-free, there's a link. It's buy me a coffee dot com slash fexingo. That's it. No tiers, no perks, just a way to say 'this matters'. And genuinely, it makes a difference. Luna: Right. And now back to Leica. One thing I find fascinating is how they've handled the secondhand market. Leicas hold their value incredibly well. A used M6 from the 1990s can sell for more than its original price. That's not an accident. Lucas: No, it's not. Leica has deliberately cultivated that residual value. They offer repair and servicing for cameras that are decades old. They still produce parts for the M6, which was discontinued in 2002. That kind of long-term support builds immense trust and reinforces the idea that a Leica is an investment, not a disposable gadget. Luna: And it also creates a virtuous cycle for new sales. If you know your Leica will be worth a significant percentage of what you paid five years from now, the high price tag feels more like a deposit than an expense. Lucas: Exactly. And that's a lesson that goes beyond cameras. Any company that can make its product hold value over time — whether through durability, serviceability, or brand cachet — creates a fundamentally different relationship with customers. You're not just selling a thing; you're selling an asset. Luna: So what's next for Leica? The smartphone camera has gotten so good that even professional photographers sometimes use their iPhones. Can the rangefinder survive another decade? Lucas: I think it can, as long as they stay disciplined. The risk is always that they get greedy and try to scale too fast. If Matthias Harsch decides to double production to meet short-term demand, the scarcity premium could erode. If they license the brand too widely — there's already a Leica branded projector and binoculars — it could feel diluted. But so far, they've navigated that line well. Luna: And the younger generation? Are twenty-somethings buying Leicas? Or is it mostly older professionals and wealthy enthusiasts? Lucas: Actually, there's been a notable uptick in younger buyers, particularly for the Leica Q3. Part of it is social media. Leica has a very strong presence on Instagram, and they've collaborated with influencers who aren't traditional photographers — streetwear brands, designers. The Q3 also has better video capabilities, which helps. But I think the bigger factor is that for a certain kind of young creative, owning a Leica is a status signal that's more subtle than a luxury watch. It says 'I care about craft' rather than 'I have money'. Luna: So the brand is evolving without losing its core. That's a hard balance. Most companies that try to stay relevant to younger audiences end up alienating their loyalists. Leica seems to have found a way to do both. Lucas: They have. And that's what makes this case study so rich. It's not just about surviving disruption — it's about using disruption to clarify your identity. Leica could have tried to compete with Canon and failed. Instead, they became more Leica. And that turned out to be the winning move.