As both a Leica enthusiast since the early 1970’s, and a corporate turnaround specialist, I’ve followed Leica’s various responses to the evolution of the photography market with keen interest.

It was easier to understand Leica’s strategy while it was a public company since its financial statements and notes to shareholders were readily accessible. Since being rescued by Dr. Kaufmann a few years ago, that’s no longer the case. Private companies in trouble do have some distinct advantages, one of them being the ability to exercise the wonderful entrepreneurial privilege of “before you can make it, you have to fake it”, i.e. they can spin all kinds of great stories to inspire customer confidence while they’re getting their act together. And I’m not being facetious here; customer confidence is a crucial driver of success in any rescue (just look at what is happening to the US auto industry if you have any doubts).

Nevertheless, we can still understand even a private company’s strategy from the outside, by looking at what it is doing in the market. One thing that’s clear is that Leica has decided to reposition itself as a luxury-goods player à la Louis Vuitton, Rolex, and Zegna, among many others. You will have surely noticed the rather astronomical rise in prices for its cameras and lenses. The repatriation of its manufacturing of the X1 POS to Germany is another nail in the coffin of the understandable, if misguided, partnership with Panasonic that was an effort to play both sides of the market: The traditional Leica enthusiast, and the new digital POS user. The release of painful (to traditional Leicaphiles) cameras like the white M8.2 and the new Hermes M7 are further nods to the purposeful collectors and fashionistas.

My original reaction to all this was one of anger and disappointment as I saw Leica “speaking” less and less to traditional users like myself. But stepping away from my personal interests and looking at it professionally, it’s fairly clear that this is the right strategy for Leica – simply because there are few other options left. And ultimately, it is also the right strategy for users like me, who must swallow the bitter pill that in a market of disposable cameras, we will all have to pay a lot more for brilliant design and superb craftsmanship.

But there’s a potential fly in this therapeutic ointment. There are few (I can only think of one) luxury goods makers in the high technology market. In many ways Leica brings Danish audio and video maker Bang & Olufsen to mind. With superb design and aesthetics, wonderful sound and images, and an astronomical price, B&O is de-rigeur in the homes of the rich and famous. But a sound system isn’t a digital camera, and a Leica in particular demands photographic skill as well as the money and aesthetic sensibilities to own one. The “S” function on the M8.2 was an effort to make the camera more accessible to a less experienced segment of the market. It failed and is nowhere to be seen on the M9 (rightfully so).

The M9 will be an unqualified success because it is the Holy Grail for Leicaphiles. I bought an M8.2 new in May 2009 and already have an M9 on order. But would I buy an M9.2 or an M10 within the next 5 years? I don’t think so. The S2 is still not available and Leica’s competitors aren’t standing still. How long before Canon and Nikon have technologically competitive products for the professional, at a fraction of the price? Short product life-cycles are now the norm for technology companies. Products are generally built so well that they can last forever; the key is to keep innovating and make them technologically obsolete while bringing new stuff to market fast, in order to keep revenues flowing.

The nagging question is: Is there a sufficient upscale market for the M, the S, possibly a new R, and point-and-shoots like the X1 to sustain a company like Leica in the medium term? And will buyers shelling out thousands of dollars be interested in continuing to fork out for products that become obsolete every couple of years? An authentic Louis Vuitton bag will last a lifetime with some care. A B&O will provide pleasure for 10-20 years (I finally sold mine a couple years ago after 20 years of use). A Rolex will last several lifetimes, passed down from one generation to the next. A digital Leica? Two to four years…maybe.

One possible answer is that Leica must build upgradeability into its cameras. I would have been happy to pay a couple of thousand dollars to upgrade my M8.2 to an M9. But for the time being, I appreciate the efforts and moneys that are being invested to save a beloved company that represents values so dear to the many serious photographers that grew up with its iconic brand.