Latest / The Pivot Podcast with Fexingo: How Businesses Change Direction and Survive Disruption / How a 120 Year Old Camera Maker Survived Digital Disruption
Transcript
- Lucas: So here's a number I want to start with: In the year 2000, roughly 70 percent of the global camera market was film-based. By 2010, that number had inverted — digital was 90 percent of the market. And by 2020, the standalone camera market — digital point and shoots, DSLRs — had shrunk by roughly 85 percent from its peak. Luna: Yeah, that collapse is brutal. And it didn't just kill brands like Kodak or Polaroid. It took down a whole category. But one company — a 120-year-old optics maker — somehow survived and actually thrived. Lucas: Right, I'm talking about Leica. The German company that invented the 35mm film camera. If you know Leica at all, you probably think of a rangefinder camera that costs five or six thousand dollars. A luxury object for photography purists. And that image is still there — but it's now a tiny sliver of their business. Luna: So what actually happened? How does a company that built its entire identity around film photography survive the digital earthquake? Lucas: Well, the short answer is: they stopped thinking of themselves as a camera company and started thinking of themselves as an optics company. Specifically, a precision lens maker. And that shift — slow, painful, contested internally — is what kept them alive. Luna: But Leica wasn't the only one with great lenses. Nikon and Canon had them too. What made Leica's pivot different? Lucas: Good question. Nikon and Canon were big enough to ride the digital wave — they had massive consumer electronics divisions, video technology, sensor R&D. Leica didn't have that scale. So they had to pick a very specific niche where their brand and optical expertise gave them an edge. And they found it in an unlikely place: the smartphone. Luna: Wait — Leica lenses in smartphones? That's a thing? Lucas: Yeah, it started around 2016. Leica partnered with Huawei to co-engineer the camera system on the Huawei P9. That was the first big collaboration. The idea was simple: Huawei wanted to differentiate its phones on camera quality, and Leica needed a volume business for its lens designs. The partnership was a huge success in China and Europe. Luna: So Leica basically became a brand and design partner for smartphone cameras. That's a pretty radical shift from selling a $5,000 camera to a collector. Lucas: Exactly. And they didn't stop there. They also pushed into industrial metrology — those are the high-precision lenses used in semiconductor manufacturing and medical imaging. Leica's parent company, the Danaher Corporation — actually, wait, Leica was owned by Danaher for a while, but now it's part of a group called Leica Microsystems. And that division, which makes microscopes and surgical optics, now generates more revenue than the camera business. Luna: That's the key number, right? If I remember correctly, the consumer camera division went from being about 70 percent of Leica's revenue in the early 2000s to less than 10 percent today. Lucas: Yeah, you're spot on. The imaging division — the one that makes cameras and lenses for consumers — is now a relatively small piece of the pie. The big money is in microscopy, industrial optics, and surgical visualization. Leica Microsystems alone does over a billion euros in revenue annually. Luna: So the camera brand that enthusiasts love is essentially a loss leader for the real business. That's fascinating. But also — what about the cultural shift inside the company? You can't just tell employees who've been designing rangefinders for fifty years that they're now in the smartphone optics business. Lucas: That's the hardest part. And honestly, Leica struggled with it. There was a lot of internal resistance. The old guard saw digital as a compromise. The partnership with Huawei was controversial among Leica purists — they worried it would dilute the brand. And initially, it probably did. But the financial reality was undeniable. Luna: It reminds me of what happened at other legacy brands. You have to kill the thing you love to save the company. But Leica managed to preserve the core — they still make the M-series rangefinder, handmade in Germany. They just don't depend on it anymore. Lucas: Right. And they leveraged that heritage as a credential. When Leica says 'our lenses are used in space telescopes and surgical microscopes,' that credibility helps them charge a premium in the smartphone partnership. They're not just a brand; they're an engineering stamp of approval. Luna: Which brings us to a broader lesson: if your core product is being disrupted, look at your underlying capability. Leica's capability wasn't 'making cameras.' It was 'making precision optics that bend light in exactly the right way.' That capability found new markets. Lucas: Exactly. And I think that's the most actionable takeaway here. A lot of companies define themselves by the product they sell, not the skill they own. Kodak owned the chemistry of film — but they didn't see themselves as a material science company. Leica owned lens design, and they did see themselves as an optics company. That distinction made all the difference. Luna: Also worth noting: Leica didn't make this pivot overnight. It took about fifteen years. They experimented, made mistakes. They launched an early digital camera, the M8, which was buggy and overpriced. But they kept iterating. Lucas: Yeah, the M8 was rough. It was a $5,000 camera that had issues with infrared light and required special filters. But they learned from it, and the M9 and M10 series were much better. They also invested in the SL system, a mirrorless camera that competes with Sony and Canon at the high end. So they're still innovating in consumer cameras, but now it's a skunkworks project within a larger optics conglomerate. Luna: And that larger conglomerate gives them the R&D budget to keep doing it. Without the industrial and medical revenue, Leica the camera brand would have gone under. Or been bought and gutted. Lucas: Which is exactly what happened to brands like Rollei, Yashica, Minolta. They either disappeared or got absorbed. Leica survived because they had a second act they could pivot into. But actually — I'm glad you mentioned that broader lesson, because it ties into something I've been thinking about. We talk a lot on this show about how companies reinvent themselves, and in an odd way, it mirrors how we think about supporting work like this podcast. Luna: How so? Lucas: Well, look — we deliberately don't run ads on these episodes. We made a choice early on that the conversations would be better without commercial interruption. And that works only if the people who find value in them occasionally chip in. It's not a big ask — it's like buying us a coffee if the show has helped you think about your own business differently. Luna: Yeah, exactly. It keeps the podcast independent and lets us cover stories like this Leica one without worrying about pleasing a sponsor. If you want to support that, the link is buy me a coffee dot com slash fexingo. No pressure, but it honestly makes a difference. Lucas: Right. And to bring it back to Leica — there's one more piece of their story I find really telling. In 2018, Leica opened a new factory in Wetzlar, Germany, entirely dedicated to producing lenses for smartphone modules. That's a factory making precision glass for phones. Twenty years ago, that would have been unthinkable for a company that prided itself on handmade cameras. Luna: So they literally built a new production line for a world they used to resist. That's the real pivot, isn't it? Not just a strategy document, but a physical reallocation of capital and talent. Lucas: Exactly. And it worked. Leica is now profitable, growing, and still making the cameras that enthusiasts love. But the survival engine is the B2B optics business. That's the lesson: have a plan B that uses your core skill, even if it feels like a betrayal of your brand identity. Sometimes the brand you love only survives if you let it become a smaller part of a bigger company. Luna: So for anyone listening who's in a legacy business facing digital disruption — the question isn't 'how do I save my product?' It's 'what is the skill underneath my product that I can sell to a different market?' Lucas: Exactly. Leica's skill is optics. Yours might be logistics, data analysis, material science, or even just a trusted brand. Find the need that skill meets, and don't be afraid to let your old product line shrink. It might be the only way to keep the company alive. Luna: And maybe, like Leica, you'll end up with a smaller but beloved core product — and a massive hidden business powering it all. That's not a bad definition of a successful pivot. Lucas: Yeah. I think that's the note to end on. Next episode, we're going to look at a very different kind of pivot — one that involves a company that literally burned its own business model to the ground and rebuilt from scratch. Should be a good one.