All of us here know the technical hurdles to making small lenses for large digital sensors — angles of incidence, peripheral illumination, off-set micro-lenses, and so on. Leica proves that these issues can be satisfactorily overcome, though perhaps not at a sensible cost. I suspect the cost could be reasonable, though (for high-volume products). What I doubt is market demand. You have to question whether people really want small lenses when they overwhelmingly choose zooms over primes, large cameras over small cameras, etc. Certainly the American market isn't excited by compact size: mirrorless interchangeable-lens camera uptake has been slow there compared to Japan or the UK, for example.
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