Leica Camera Ag Business Information, Profile, and History

Company Perspectives:

Every social activity--whether private or professional--requires certain rules of the game for participants. Five essential rules hold for Leica Camera: open and honest in all dealings; fun in problem-solving; encourage and demand creativity; acting rather than waiting to see; respect and appreciation of each other's values.

History of Leica Camera Ag

Leica Camera AG is a manufacturer of high quality equipment for photography, photographic reproduction, and observation. The company, which was the first to successfully market a 35-mm compact camera, is best known for its expensive, highly sophisticated cameras. Leica Camera's product line includes compact cameras, of both rangefinder and single reflex lens system varieties, as well as lenses, projectors, enlargers, and binoculars. Major cornerstones of the company's high price policy are extraordinary quality, product longevity, and system compatibility. Headquartered in Solms, Germany, Leica Camera has three production facilities in Germany and one in Portugal, as well as marketing subsidiaries in the United States, France, and the United Kingdom. Leica products are marketed by over 100 local agents around the world and sold by traditional specialist retailers. The company's largest markets are Germany, with about 34 percent of total sales, and the United States with about 19 percent. Lancet Holding BV, the property of Swiss industrialist Stephan Schmidheiny, holds a 13.6 percent share in the company.

1840s Origins

The roots of Leica Camera go back to 1849, when 23-year-old Carl Kellner, a talented mechanic, founded his own Optical Institute in the German town of Wetzlar. Kellner invented an optical corrected eyepiece with a new combination of lenses that significantly improved the image quality in field glasses and telescopes. The technology was well received by scientists, and, encouraged by this success, Kellner next focused on building a new kind of microscope based on mathematical principles. Kellner's microscopes, which first left his Wetzlar workshop in 1851, generated images of exceptionally high quality and soon earned a him reputation in the scientific community. In 1855 Carl Kellner died of tuberculosis. His widow married Friedrich Belthle, who secured the existence of the Optical Institute.

In 1864 mechanic Ernst Leitz joined the Optical Institute. One year later he became a partner and, after Belthle's death in 1869, the sole proprietor of the company which he renamed E. Leitz, Wetzlar. Leitz's introduction of the more economical serial manufacturing of microscopes also increased their image quality standards and made them more reliable for scientific research. By 1900, the Leitz company had gained a worldwide reputation, employed 400 people and produced about 4,000 microscopes a year. The market for microscopes was growing, and, only a decade later, the Optical Institute produced 9,000 microscopes, the variety of which was also constantly expanding. When Ernst Leitz died in 1920, his second son, Ernst Leitz II, took over the business. Four years later he helped make a new invention commercially successful--the first Leitz Camera, called Leica for short.

Oskar Barnack Creates the Leica Camera in 1914

Up until the first decade of the 20th century photography was more of a hobby than an art form. The plate cameras used by photographers were heavy and needed the support of even bigger and heavier tripods. For that reason photography was limited to highly composed images, most often taken in studios. Several manufacturers were working on a more compact camera using smaller film formats that would allow photographers more mobility and flexibility. Among the models launched were the American models Sept, Sico, Phototank, Tourist Multiple, and Simplex, as well as the French Homeos stereo camera, and the British Centum Film camera, none of which succeeded commercially.

The first 35-mm compact camera was developed and manufactured at the Leitz company. Oskar Barnack experimented with his idea for several years before he finally invented the Leica camera. Apprenticed to a company in Lichterfelde that made astronomical instruments, he became interested in technical instruments, astronomy, and photography. After he finished his training as a precision tool maker, Barnack joined Jena-based optical manufacturer Carl Zeiss. In his spare time, he went on hiking trips and became an amateur photographer. In order to take pictures on his hiking trips, Barnack started experimenting with a plate camera in 1905, which he later modified to take 20 mini-pictures on one plate of film. Later he began experimenting with a device for cinema film, which perforated the edges of film so that it could be moved along mechanically with sprockets. The camera Barnack designed used film twice the size of film used by movie makers, which he found optimal for later enlargement. Barnack showed his invention to a manager at Carl Zeiss, who rejected it.

In 1911 Barnack moved to Wetzlar and became a master machinist at the E. Leitz company. Ernst Leitz II encouraged Barnack to develop his camera idea further and made him a development engineer at the Leitz experimental laboratory. There Barnack constructed two metal-made miniature cameras using 35-mm motion-picture film with single-shutter-speed. The so-called 'Ur-Leica', or 'original Leica,' was equipped with the famous Elmar lens which was developed by German microscope expert Max Berek, who had joined E. Leitz in 1912. The pictures Barnack took in 1914 in the countryside around Wetzlar were of exceptionally high quality.

Further development of the Leica camera was interrupted by World War I. Finally, in 1924, Ernst Leitz II decided to mass produce the camera, and in December of the same year the first six Leica cameras were built at E. Leitz. In 1925 the Leica camera was presented to the public for the first time at the Leipzig Spring Fair and became an instant success.

Revolutionizing Photography in the 1930s

The first serial Leica I or model A used an f/3.5 fixed lens in a retracted position, an eye-level viewer, and a focal-plane self-capping shutter with a speed range of 1/25 to 1/500 of a second. The 35-mm film with 36 exposures was advanced by a knob that cocked the shutter at the same time that it wound the film. The Leica was small enough to fit in a coat pocket and enabled photographers to take several pictures in a row without changing film. This ability was instrumental in the development of photojournalism; reporters and artists alike were able to work quickly and be flexible, thus broadening the scope of their subject matter considerably. The Leica camera was soon embraced by photographers around the world and greatly enhanced their ability to capture the world on film. Postwar Germany in the 1920s became the center of a new, dynamic style of photography. Many well-known photographers of the time, including Henri Cartier-Bresson, became loyal Leica users. Recalling the beginning of his career, in an introductory essay for his 1952 collection The Decisive Moment, Cartier-Bresson would recall: 'I worked with enjoyment. I had just discovered the Leica. It became the extension of my eye, and I have never been separated from it since I found it.'

Leica users were soon demanding new features, and, encouraged by Leica's success, E. Leitz refined its next generations of cameras in various ways. Lenses could be changed, from wide-angle to telephoto; a viewfinder was built into the camera; a more affordable version of the Ur-Leica was made available, the Leica Compur or Model B, which did not have the focal plane shutter. The Leica II or Model D introduced in 1932 used a lens-coupled range-finder for quick and accurate focusing. Another new model, Leica III or Model F, was introduced a year later with slow shutter speeds. Another field of improvement was the image quality. Up until 1935 Max Berek designed several award-winning lenses, including the fast Hektor, Summar normal, Elmar long-focus, and Thambar. The additional improvements introduced during the 1930s made Leica cameras especially famous for their high optical quality and very quiet shutter. Leitz marketing strategy including using the testimonials of such famous photographers as Margaret Bourke White and Cartier-Bresson, as well as that of adventurers like Admiral Richard Byrd and Charles Lindbergh. The strategy proved very effective.

The growth in popularity of the Leica 35-mm cameras inspired film manufacturers as well as competitors. The introduction in 1931 of Agfa's panchromatic emulsion film, which was sensitive to light of all colors at a speed of ASA 32, made sharper enlargements from 35-mm negatives possible. During this time, One of Leica's main competitors was the Contax, another 35-mm camera introduced by Carl Zeiss in 1932.

World War II interrupted camera development and production at the Leitz Werke. However, Leica cameras were widely used to capture images of the war. After the war, many journalists, artists, and professional and amateur photographers continued to use Leica cameras, and Leitz could hardly keep up with demand. In 1949 the company established a modern glass laboratory which developed specialty glass for optical lenses. In 1951, one year after Ernst Leitz II turned 80, the one-millionth Leica lens was produced at the Leitz Werke. To serve the fast growing North American market, a Leitz subsidiary was founded and a camera production plant built in Midland, Canada. Another legendary Leica model, the Leica M3, was presented to the public at the Cologne Photokina, the world's largest photography fair, in 1954.

Ernst Leitz II died in 1956. His three sons, Ernst Leitz III, Ludwig Leitz, and Günther Leitz took over the management of the company. During this time, competition between Leica and Contax intensified, with each vying for dominance of the professional camera market. The Contax FB, introduced by Zeiss in 1956, would be the last 35-mm model to carry the Zeiss name for many years.

Competition Intensifies in the 1960s

During the 1960s Leitz manufactured custom-made Leica cameras for special uses in addition to its several serial models. For example, the company produced 125 Leica 3G cameras with the three-crowns emblem of Sweden engraved in an all-black case for the Swedish Army. In 1966, 150 Leicas were custom made for the NASA with oversized controls for advancing the film and opening the case so that they could be handled by astronauts wearing gloves on space missions. To keep up with demand, Leitz had to expand production capacity. In 1966 a new production plant for Leica cameras started operations in Oberlahn, near Weilburg, Germany. In 1973 another production plant for Leica cameras went into operation in Vila Nova de Famalicao near Porto in Portugal. In 1968 ten Leica collectors established the Leica Society in the United Kingdom; by the mid-1990s the Society had grown to over 2,100 members. However, the times of unchallenged market leadership came to an end as the 1970s approached.

Both Leica and Contax cameras were very expensive and many aspiring photographers could not afford them. Not surprisingly, several manufacturers attempted as early as the late 1920s to create inexpensive 35-mm cameras for a mass market. Most of them failed to gain an audience, as the Great Depression made purchases of such things as cameras either impossible or frivolous. The first successful attempt at marketing a cheaper 35-mm camera was the Argus, introduced in the United States in 1935 at a price of $12.50.

The real competitive threat, however, came from the other side of the globe. After World War II the Japanese started challenging the world's leading camera manufacturers. At first, the imitation Japanese Leica and Contax cameras, which carried the labels Canon and Nikon, elicited only skepticism. However, when American photojournalists used Japanese cameras to photograph the Korean War, they found that some of the Japanese lenses were of very high quality. During the 1950s and 1960s Japanese camera makers made quality the number one priority for their exports and as a result became more and more successful in competing with rangefinder cameras and lenses made in Germany. Also, the many advantages of single lens reflex cameras, in which the user views his subject directly through the lens rather than through a telescoping mechanism to the side of the lens, became serious competition for the rangefinder systems. In 1965 the first single-lens reflex camera made by Leitz, the Leicaflex, was introduced. The next models followed in 1968 with the Leicaflex SL, the Leicaflex SL2 in 1974, and the Leica R3 in 1976.

Due to shrinking demand and high development and production costs, by 1970 the Leica product line was no longer profitable. Retail prices could not cover the cost of making the expensive cameras and lenses by hand. Under pressured to make strategic decisions that could turn Leica's fate around, Leitz started looking for suitable strategic partners and for ways to cut costs for camera development and production. In 1972 Leitz signed a partnership agreement with the Japanese camera maker Minolta. However, the old rivalry with Zeiss and its Contax flared up again in 1974, as Zeiss had become part of a group that developed a new model, the Contax RTS, a single lens reflex system. Additional development costs were incurred when Leica's new rangefinder model M5 turned out to be too bulky.

An Independent Company in 1992

During the early 1980s Leitz kept reporting losses with Leica cameras despite the loyalty of numerous professional photographers and world famous collectors such as the Sultan of Brunei and Queen Elizabeth. In 1986, Leica GmbH was founded to manage the Leitz camera division. One year later Ernst Leitz Wetzlar GmbH and Wild Heerbrugg AG merged to form Wild Leitz AG. The new optical concern was headquartered in Switzerland and employed 9,000 people. In 1988 Leica GmbH became an independent division of Wild Leitz and moved headquarters and camera production to a new facility in Solms near Wetzlar. By that time the camera arm had produced losses for over a decade, subsidized by profits from Leitz microscopes and surveying systems.

While Leica had difficulties selling its annual output of just 20,000 cameras retailing at $3,200 to $4000, Japanese camera maker Minolta sold about 2.5 million cameras in 1988. In the United States Leica camera sales reached a peak of about $8 million in 1985 and dropped off sharply afterwards to about half that amount in 1987. Less than eight percent of America's camera dealers carried Leica in 1988. It was a vicious cycle; in order to gain market share Leica needed to aggressively market its product lines, and this required money the company wasn't making. Leitz's decision to move half of the camera production abroad also turned out to be problematic. While it lowered personnel cost by about one-third, this gain could not outweigh endless quality problems with the parts manufactured in Portugal and Canada. The new Leica management decided in summer 1988 to move a great chunk of the lens production and camera assembly back to Germany. Another of the company's strategic mistakes was not pursuing the new technology of auto-focus cameras which had first been invented by Leica engineers. The Japanese, however, realized the commercial potential of this new concept and successfully introduced it to the market while Leica was struggling with reorganization.

In 1990 Wild Leitz Holding AG merged with the British optical group Cambridge Instrument Company. Leica Camera GmbH, the camera subsidiary, became Leica Camera AG. Two years later Wild Leitz sold its Canada production plant to Hughes Aircraft, which continued to manufacture some lenses for Leica cameras. In 1992 a team of executives, led by Leica's president Bruno Frey and supported financially by a subsidiary of Deutsche Bank, attempted a management buyout of the camera operations from Wild Leitz, but failed. Two years later another attempt led by former CFO Klaus-Dieter Hofmann was successful. The Leica brand name remained the property of Wild Leitz, which allowed the new independent company to continue using it for their microscopes and other instruments. Wild Leitz also kept a minority share in Leica. Hofmann became CEO of the newly independent Leica Camera AG.

Two years after the management buyout, Leica Camera was ready to make an initial public (IPO) offering of stock. Some 4.5 million shares were floated on the Frankfurt stock exchange, and Hofmann managed to get the company out of the red. In the year of the IPO Leica introduced the 'R' camera line, its first new series in 30 years. After record profits in 1996, the company was able to report record sales the following year, yet it realized losses rather than profits for 1997 and 1998 amounting to DM 30 million. The acquisition of German miniature camera maker Minox in 1996 turned out to be a major mistake, since the expected synergy between to the two companies did not take place. At the same time Leica camera sales dropped sharply in Asia. In 1998 Leica Camera was also confronted with a lawsuit that accused the company of profiting from slave labor under the Nazi regime. Leica, answering the charges, maintained that its founder, Ernst Leitz, had rescued several Jews from deportation to concentration camps and had been jailed himself by the Nazis for helping Jews.

At the beginning of 1999 Hanns-Peter Cohn became the new CEO of Leica Camera. The new management team developed a strategy for the new millennium, which it referred to as 'Leica 21.' One of its cornerstones was the brand-new Leica S1 series of digital scanner cameras. This was a first step into another revolution in photography: the age of computer-based image recording and processing that did not require the 35-mm film that made Leica a legend. Whether this new direction would succeed remained to be seen. Regardless, Leica remained one of the most important and influential brands of the 19th and 20th centuries.

Principal Subsidiaries: Leica Camera Inc. (United States); Leica Camera s.a.r.l. (France); Leica Camera Ltd. (United Kingdom); Leica Aparelhos Opticos de Precisao S.A. (Portugal; 91.33%); Leica Projektion GmbH Zett Geräte (Germany); Feinwerktechnik Wetzlar GmbH (Germany); Minox GmbH Optische und Feinmechanische Werke (Germany); VSZ Versand- und Servicezentrum GmbH (Germany).

Principal Competitors: Nikon Corporation; Olympus Optical Co. Ltd.; Canon Inc.; Matsushita Electric Industrial Co., Ltd.; Minolta Co., Ltd.; Carl-Zeiss-Stiftung.

Chronology

• Key Dates:

• 1849: German mechanic Carl Kellner founds Optical Institute in Germany.
• 1925: First Leica camera is presented to the public in Leipzig, Germany.
• 1952: Leica subsidiary and production plant is established in Canada.
• 1973: Tool production and assembly plant in Portugal starts operations.
• 1986: Leica GmbH is founded.
• 1996: Initial public offering of Leica Camera AG in Frankfurt/Main.