Outside the IT world there are still many people who don't see any value in digital still cameras. Leica, one of Germany's most well-known camera makers, probably has plenty of such customers – but that is about to change. The company yesterday announced a partnership with Matsushita, better known as Panasonic, to jointly manufacture digital still cameras.

Leica, which is highly recognised 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. Leica does not currently sell an own-brand digital camera.

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.

By partnering with Leica, Matsushita will be able to better target consumers who prefer analogue film images to digital images, said Toda. The company hopes to do this by providing high-end products which give photos of a quality closer to that of film.

Leica is striving to catch up in the digital photography market, according to Hanns-Peter Cohn, chief executive of Leica. If all goes well, a full joint venture could be formed by the two companies in the future, he said.

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 far higher-quality image than digital cameras. CCD (charge coupled device) technology will be key to improvement of digital cameras, and work on higher resolution chips is under development, said Toda.