Leica to enter digital age with Matsushita

Outside the IT world there are still many people who don't see any value in digital still cameras. Leica Camera AG, one of Germany's most well-known camera makers, probably has plenty of such customers -- but that might be about to change. The company announced Tuesday a partnership with Matsushita Electric Industrial Co. Ltd., better known by its Panasonic brand name, to jointly manufacture digital still cameras.

Leica, which is highly recognized for its optical technologies, will provide lenses for the products while Matsushita will be responsible for the electronics in the cameras. The collaboration builds on an existing relationship the two companies have: Leica has been supplying Matsushita with lenses for its digital video cameras for over a year.

The first cameras produced as part of this collaboration are likely to appear in the third quarter of this year under both the Leica and the Panasonic brand names, said Kazuo Toda, a board member of Matsushita speaking at a news conference to announce the alliance.

For Matsushita, the alliance marks its re-entry to the digital still camera market after having given away the business to its affiliate Matsushita-Kotobuki Electronics Industries Ltd. (MKE) in 1999. By partnering with Leica, Matsushita will be able to better target consumers who prefer analog film images to digital images, said Toda. The company hopes to do this by providing high-end products which have a photo-quality closer to that of film.

Leica is striving to catch up in the digital photography market and regards the sector as a key focus for the next three to four years, according to Hanns-Peter Cohn, chief executive officer of Leica. It plans to concentrate on working with one partner, Matsushita, in order to "seriously enter the market," Cohn said. If all goes well, a full joint venture could be formed by the two companies in the future, he said.

The two companies hope to grab a 10 percent worldwide share by 2003, said Matsushita's Toda, who added his company expects the digital still camera market, which had global shipments of 11 million units in 2000, to expand to 18.5 million units next year.

However, whether the two companies can produce digital still cameras that satisfy Leica's film camera users, remains the big question. The biggest gap between the two technologies remains that of resolution, with film cameras able to produce a much higher quality image than digital cameras. Here, CCD (charge coupled device) technology is key and work on higher resolution chips is under development, said Toda.

"For this upcoming project, the CCD development was done within Matsushita, but we are aware of the importance of new CCD (advances) and are working on it with Leica at this stage."

Leica Camera, in Solms, Germany can be contacted at http://www.leica-camera.com/.

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