Cornell Lab Review - Zeiss Did Very Well Here (5 Viewers)

[Troubador]

To best clarify this situation, here is the best corporate view that I can post.

First, my previous comment about "facts are not correct" was totally intended to paint the picture that Zeiss does not simply "purchase and screw on eyecups". Tremendous effort and money has gone into the Conquest HD line and Zeiss is NOT a simple screwdriver shop. The complexities to get this done go far beyond all of our thoughts, mine included. If I insulted anybody with this comment, my apologies.

Next, "Made in" discussion. Zeiss has not hidden the fact that our 3 tier strategy uses different global advantages.
Victory: made in house, best that Zeiss can offer.
Conquest: a complex blend between manufacturing and sourcing.
Terra: designed, engineered, QC and warranty by Zeiss, with production out-sourced

Product management develops the products and determines what we make ourselves and what we source based on the product design, specs and line strategy. When the product build plan is done, it goes to our legal department to evaluate the process and provide us with directions on how to mark the product. We simply follow legal guidelines. In my time at Zeiss, I have not ever heard that product management is building products with specs to attain markings. The Conquest line falls into that strategy. Partially made by us, partially outsourced components and / or sub components, finished and QC'd in Germany, and marked based on the legal guidelines given to us. What is or is not done in house I cannot divulge. I'm sure you understand.

Regarding comment about Zeiss "going away":
We ALL clearly understand that although Zeiss was the leader in optics for 100 years +, we fell asleep and let others take a leading consumer market role. The good news is that Sports Optic is completely awake now and regaining what we have lost. Our 3 tier plan will build a giant base of users that become loyal to the Zeiss brand. Loyal users trade up. As long as we make "best of class" highly competitive products in the Terra and Conquest categories, AND continue to make new HT quality of products and expand the Victory offerings, it's only a matter when we control the top tier, not if. However, investments are substantial to do this. Marketing and communication expenses have to be reinvented. We've made HUGE strides in this over the last 24 month, with a lot more work to do. And for investments in products? A single new Victory product is into the 7 figures of investment. A Conquest product line (HD's), is also into the 7 figure range. In the last 24 months, we've introduced 57 sku's spanning 12 product classes across 3 product tiers... with GREAT things to come. All in, yea, we are pouring investments into our future.

So, I hope this settles some of the questions from this thread and explains a bit better why we do what we do. Also, apologies again for my comment to Giji.

Thanks for this Mike
Two things: corporate speak got the better of you eventually: SKUs? Stock Keeping Units? Would we know these better as 'products'?

In the entirely laudable and necessary enthusiasm to launch new product, don't neglect careful control of quality during design and production and quality assurance. You know where you have issues and they need dealing with.

Wish you and Zeiss all the good fortune in the world.

Lee Thickett

 

[jan van daalen]

Reading it back, this sounds wrong.
It should mean Leica and Swarovski are seperately private owned companies and Swaro is old money.

 

[pompadour]

Thanks, David et al., for the info. on the Japanese "generic" binocular makers.

<This> webpage in the site of Light Optical Works gives an excellent idea of the system. Inter alia, <these> <two> threads in other forums look at which "brand" cos. contract out, how much, etc, and Steve C of Bf., there "Klamath", suggests, in summary: "Never mind"!

Didn't know much of this before, and my first reaction was shock, that it's unreal. I was part of the old order, my faith in a bin maker in inverse proportion to how many major parts it contracts out: to manufacture, especially to design. Wouldn't have believed Nikon "picks" someone else's design asking them to do minor changes to the optics in a new dress, as for the 8x30 "shared" with Kite (in this matter I was baffled till now), nor that Zeiss "orders" a model in the way Gijs seems to imply for the new Conquest (which I've been eyeing - since before the Cornell ratings!)

On reflection, that's how it is already with many other kinds of goods, the trend will surely evolve and spread, and on the whole greatly benefit producers and consumers. As I see it, a "brand" co. keeping such info. secret is justified as long as its competitors aren't aware of details, but not otherwise.

But enough. Maybe everyone knows all that. Think I'll relax, go out and have a peek at some birds with the Kowa, or Leica, or... wait... I mean... Well, Steve is right.

 

[mjensen6577]

Thanks for this Mike
Two things: corporate speak got the better of you eventually: SKUs? Stock Keeping Units? Would we know these better as 'products'?

In the entirely laudable and necessary enthusiasm to launch new product, don't neglect careful control of quality during design and production and quality assurance. You know where you have issues and they need dealing with.

Wish you and Zeiss all the good fortune in the world.

Lee Thickett

Lee, yea, I guess too much corporate lingo. ;-) SKU's meaning new item #'s. For example, a 10x42 Terra ED black, and a 10x42 Terra ED blue are 1 item class, 2 sku's.

 

[etudiant]

Interesting exchanges.
It seems both Mike and Jan have the wish to see Zeiss maintain/restore leadership in optics, but the perspectives differ, Mike sees the path forward while Jan sees the potholes at his feet. They should talk more often.
I think it is silly to blame MBAs for outsourcing. Zeiss has to achieve an adequate return to maintain its plants and pay its workers. The place is owned by a foundation afaik, so the usual stock shenanigans don't apply either.
The leadership has to see that the market is growing much faster in Asia than in the West and they would be derelict if they did not work to take advantage of that trend. That means outsourcing and building local presence in Asia. We should be grateful that they are doing the work to bring the needed QC to bear on the Asian optics suppliers, even if there are sometimes potholes here as well.

 

[SteveTS]

Thanks to Mike, #119, for taking time out from his day to post on here ; it's much appreciated and interesting reading.

Happy birding and happy hunting !

 

[Hermann]

It seems both Mike and Jan have the wish to see Zeiss maintain/restore leadership in optics, but the perspectives differ, Mike sees the path forward while Jan sees the potholes at his feet. They should talk more often.

And so does Gijs, I'm sure.

Hermann

 

[james holdsworth]

Frankly, I don't see the need for all the angst. For many years now, Zeiss made the Victory in Germany and the Conquest in Hungary.

Now, they make the Victory and HT in Germany, the Conquest in Japan / Germany [where-ever] and the Terra in China.

Whatever the arrangement, the new line-up is terrific, and [if a Zeiss fan] gives confidence in the future. The HT is best-in-class*, the HD is best-in-class* and the Terra is nearly there*. I know that some really good stuff is coming soon, and most of this angst will melt away.

*arguably of course.

 

[mjensen6577]

One more comment for Jan. I respect his opinion and we can't succeed if we don't have people like him saying "WATCH OUT"!! Our plan is no secret and it does not come without high risks, but potential high gains. Taking or retaking a market is about mindshare, not market share and consumer mindshare is the hardest challenge for a Brand. Through all of this, our #1 internal discussion is how do we make sure we don't hit the potholes in front of us. So, my participation here, although sometimes painful, helps to keep us grounded. I do appreciate the comments.

 

[elkcub]

Hi Ed,

The "Warbler" is a new one to me. I must have missed it. I have no idea what it looks like.

I have an 804 and the 828 and that's probably all I will ever have now although I keep hoping that they will come out with the 7 x 36 Eaglet again.

Back in 2001 or so I almost bought their little 8 x 32 porro which came in a little hard snap case and I'm kind of sorry I didn't because it disappeared quickly. I got an 8 x 30 EII instead at that time which I still have.

Bob

Bob,

Guess I got lost for a few days. I borrowed this Model 829 8x42 Warbler picture from a recent online sale. My cut-away is the same model, and I gather it's pretty close to the construction of the original 828, which also has a separate diopter control on the right tube. The newer 828 has an integrated diopter in the center that works beautifully.

Swift could catch-up by incorporating ED into the objective and improving the prism coatings, which I think they did with the last Eaglet. Isn't that one popular with law enforcement nowadays?

These mechanisms seem to be quite simple and robust, although not elegant by any means.

Ed

 

[Troubador]

Interesting exchanges.
It seems both Mike and Jan have the wish to see Zeiss maintain/restore leadership in optics, but the perspectives differ, Mike sees the path forward while Jan sees the potholes at his feet. They should talk more often.
I think it is silly to blame MBAs for outsourcing. Zeiss has to achieve an adequate return to maintain its plants and pay its workers. The place is owned by a foundation afaik, so the usual stock shenanigans don't apply either.
The leadership has to see that the market is growing much faster in Asia than in the West and they would be derelict if they did not work to take advantage of that trend. That means outsourcing and building local presence in Asia. We should be grateful that they are doing the work to bring the needed QC to bear on the Asian optics suppliers, even if there are sometimes potholes here as well.

Well said Etude

Although Zeiss is owned by a foundation and appears to move in mysterious ways, I think they still have to perform financially in a similar way to ordinary stock-price dominated commercial organisations because the banks will probably use ordinary financial ratios etc to assess Zeiss's financial performance and hence what they are prepared to lend to Zeiss for investment. As I understand it Zeiss can't issue new stock to drum up new money so they are dependent on borrowing and the banks will assess the risk in the same old ways.

If I've got this horribly wrong anyone is welcome to shoot me down here.

Lee

 

[Gijs van Ginkel]

mjensen6577, dear Mike,
I appreciate your response in posts 119 and 129 on my contribution about the Zeiss Conquest on this forum. I did not feel offended by your earlier reaction, so we can forget that. I was "raised" with Zeiss binoculars , the first one I bought was an 8x56 Dialyt, a very fine instrument and I later replaced it with the 7x42 Victory FL, which in my opinion still is one of the best binoculars around. I have published a number of articles on the history of Zeiss and Zeiss binoculars and knowing more and more about its history and the many high quality instruments made, it was very painful to see, for example, that Zeiss was unable to continue its high quality investments after the unification of East and West Germany. Very understandable, since funding was probably a major issue under these circumstances. I share Jan van Daalens feelings that it desirable for the market and the customers, that Zeiss comes again with exciting new products, which are worth the quality reputation Zeiss carries. The Victory HT is already one of them, which I find impressive both from its optical quality as for its design and handling comfort. I hope to see many more in the future.
Gijs

 

[perterra]

Well said Etude

Although Zeiss is owned by a foundation and appears to move in mysterious ways, I think they still have to perform financially in a similar way to ordinary stock-price dominated commercial organisations because the banks will probably use ordinary financial ratios etc to assess Zeiss's financial performance and hence what they are prepared to lend to Zeiss for investment. As I understand it Zeiss can't issue new stock to drum up new money so they are dependent on borrowing and the banks will assess the risk in the same old ways.

If I've got this horribly wrong anyone is welcome to shoot me down here.

Lee

Which for me brings a question to mind, where is the profit in binoculars?

Is it the high end? Or is it going to be the Terra segment?

Most I have met dont actually change binoculars weekly like they do on here, they tend to buy a good pair and hang on to them because spare funds go towards buying junior new shoes and keeping him in team sports.

 

[jan van daalen]

Which for me brings a question to mind, where is the profit in binoculars?

Is it the high end? Or is it going to be the Terra segment?

Most I have met dont actually change binoculars weekly like they do on here, they tend to buy a good pair and hang on to them because spare funds go towards buying junior new shoes and keeping him in team sports.

Hallo Perterra,

I think this is my playingground.

It depends in which area it's used in.
The growth is absolutely in the A-segment in our area being high end hunting but for most safari Africa.
If you are a farmer in need for a bin just to check wether it's a sheep or a plastic bag in the water on a distance of 300 meters, buy a cheap sub.
If you just want to observe for a few seconds without the need for true colors and contrast. Buy a sub.
But when birding developes and the birder is confrontated with the fact when he looks trough his neighbours (ok this is difficult typing, sometimes.....very rare.... a Zeiss) the light goes on. He sees what he missed before and goes for the A-fabric. This is what Mike was talking about. First they buy the Terra, they get the hang of it , want a little more, invest in a Conquest because the brand (oef, this really hurts) has an excellent reputation, so the costumer stays loyal, and ends up with the Victory.

In our area people step right on in at the A-level. If you spend more then ten thousend euros to see those animals, you do not want to be "blessed" with CA filling every object.

We have hundreds if not a thousand postcards from safari people who thanked us for the right choise of binoculars because on site there were a lot of sub optics that performed lousy. Ofcourse we sell a lot of Swarovski but that is so obvious!!!

Trust is earned, isn't it? The brands reputation sells. So easy!

So Zeiss is the only party of the three which has all the levels in bins and offers upgrades within the brand.
To make that happen they had to outsource.
Sight......

In Holland almost every household has at least 1 bin. That's a minimum of 4 million bins. In safari there is room for 250.000 bins going from Schiphol airport every year.
And it's all about customers loyalty and education of that customer.

Jan

 

[perterra]

Jan, I understand that part, but thinking of company profitabilty as a whole. Looking at reports, in both Swaro and Zeiss sport optics are a minor share of company profits.

Looking at where growth is forecast I wonder if hunters, birdwatchers and safari clients would justify investing euros away from development of the other lines that may show a greater potential for profit. I realize there is some prestige in alphas, but the prestige dulls when it doesnt make the money the owners wish.

I have looked thru top of the line Swaro, Leica and Zeiss, I have looked thru the Vortex razor and Nikon premier, what I took away from it was, that extra $1200 doesnt buy much difference in binocs.

With income going where it's going in the US, I dont see the market here for high end as very bright.

 

[Troubador]

Jan, I understand that part, but thinking of company profitabilty as a whole. Looking at reports, in both Swaro and Zeiss sport optics are a minor share of company profits.

Looking at where growth is forecast I wonder if hunters, birdwatchers and safari clients would justify investing euros away from development of the other lines that may show a greater potential for profit. I realize there is some prestige in alphas, but the prestige dulls when it doesnt make the money the owners wish.

I have looked thru top of the line Swaro, Leica and Zeiss, I have looked thru the Vortex razor and Nikon premier, what I took away from it was, that extra $1200 doesnt buy much difference in binocs.

With income going where it's going in the US, I dont see the market here for high end as very bright.

Hi

I don't pretend to know for sure where the most profit is made, but if it is the same as in cars/automobiles the most profit is most definitely made in the most expensive ones.

Again, with cars, one of the biggest trends has been in the spread of premium brands into market segments that wouldn't have been considered by them some 20 years ago.They have gone down-market in car size and prestige but made their aspirational brand available to more people and world-wide customers have flocked to buy more premium brands and put the Fords and General Motors of the world under severe pressure.

Viewed from this perspective Zeiss is doing what BMW and Mercedes-Benz have already done. They are creating a ladder up which, as Jan has pointed out, they hope folks will move.

And despite the trend to 'down-sized' and more efficient cars in this post financial crisis world, its still the premium brands that are the most successful.

The world has been through a number of financial bottle-necks from oil crises to banking crises but one thing seems constant: people are aspirational and want something they perceive to be better.

Zeiss's strategy appears to be to put a climbable ladder in place for them to do just that.

Lee

 

[CSG]

I did it in reverse - sort of. I went from mid to top to bottom. All three lines are terrific at their price point.

And complements to Mike Jensen for having the courage to wade into this. I hope members here appreciate that because most company execs will NOT get involved with online forums because of the nature of the beast. I have personal experience with this going back 15 years with my own online forum discussing a popular instrument brand.

 

[mjensen6577]

Profitability is a complex topic. For example, take Terra that sells for $399 retail. Dealers pay less than this. Our profit is the difference between dealer cost (what we sell it to the dealer for) and our cost. Simple enough. So, hypothetically, if a dealer makes 20% profit, he purchases it for $320, and we make 20% profit, and our cost is $254, our profit is $66 a unit. If HT's sells retail for $2400, and same math applies, our profit is $384.

So ultimately with this example, we would have to sell 6 Terra vs 1 HT to make the same money if our percentage is the same on each. The complexity is that every item has a different profit, some high, some low, some virtually non-existent. Obviously we sell more Terra's than Victory, but I can't divulge the ratios. This of course is only an example since I can't share profit info with you either ;-).

Terra gives us growth with customers that we didn't have before, so this makes the business grow. When the business grows, we sell more HT's, so our market share grows. As long as we don't spend more money to make the business grow (Staff, Advertising, freight) our profits grow, but that not possible either. So we can't really say where "most" of the profit comes from since most businesses use a blended approach and profits by item are all over the place. However, each category (Victory, Conquest and Terra) are supportive of each other. Terra growth is not possible without Conquest and Victory Brand strength, and Victory growth is challenging without Conquest and Terra consumer base.

Not sure if I even answered your question ...Clear as mud? ;-)

 

[hinnark]

Hi Steve,

You don't wanna know!!!

Since Leica is bought by a guy called Kaufmann who inhereted an immense amount of money and got the brilliant idea: "What the heck, let's buy Leica", is Swarovski, THANK YOU LORD, a family owned enterprise. That means old money and that means pride to the roots of the family's enterprise first for the long run and NOT for the quick bucks to collect their bonus.

I surely hope not to live long enough to see otherwise!!

Got confirmed that my little House does more in bins than Zeiss does in the entire BeNeLux.

WAKE UP ZEISS.

You can't allways blame it on the cook!

Jan

Jan,

I'm sorry, but this wasn't the correct answer. Suggested answer is: Minox MIG.

What I've said about MBAs is true no matter which form of corporate or how old the money might be. Sooner or later these guys generate their own business whereever they start to work, no matter what kind of business or company they are in.

Steve

 

[Troubador]

Profitability is a complex topic. For example, take Terra that sells for $399 retail. Dealers pay less than this. Our profit is the difference between dealer cost (what we sell it to the dealer for) and our cost. Simple enough. So, hypothetically, if a dealer makes 20% profit, he purchases it for $320, and we make 20% profit, and our cost is $254, our profit is $66 a unit. If HT's sells retail for $2400, and same math applies, our profit is $384.

So ultimately with this example, we would have to sell 6 Terra vs 1 HT to make the same money if our percentage is the same on each. The complexity is that every item has a different profit, some high, some low, some virtually non-existent. Obviously we sell more Terra's than Victory, but I can't divulge the ratios. This of course is only an example since I can't share profit info with you either ;-).

Terra gives us growth with customers that we didn't have before, so this makes the business grow. When the business grows, we sell more HT's, so our market share grows. As long as we don't spend more money to make the business grow (Staff, Advertising, freight) our profits grow, but that not possible either. So we can't really say where "most" of the profit comes from since most businesses use a blended approach and profits by item are all over the place. However, each category (Victory, Conquest and Terra) are supportive of each other. Terra growth is not possible without Conquest and Victory Brand strength, and Victory growth is challenging without Conquest and Terra consumer base.

Not sure if I even answered your question ...Clear as mud? ;-)

Mike
As mud goes, its not bad at all.

Then there is the question of do you take development costs all in year one of a new product, or amortise them over 2-3 years?

And what happens to the price of out-sourced components if you can't keep buying the quantities that you expected?

Indeed in some organisations, what happens to prices ex your own factory gates if you can't buy in as large a batches as you wished. Internal or 'transfer' prices can be the source of many a 'spirited discussion'.

Not asking you to comment, just making the point to anyone who cares to listen that its a complex picture.

Lee Thickett