Point being that they are just as capable as Leica to desing cutting edge lenses that are also small.
Yes and no. Yes, it all adds to choice that Zeiss have produced a ZM lens that on early reports and mtfs seems to best leica's best and considerably more expensive 35mm. No, in that it is 50% longer than the lux, which on an M camera could be an ergonomic disaster in that it blocks the finder too much, especially once there is a hood on it. The ZM lenses have been real competition for Leica for a while, but unfortunately, most of them are a fair bit larger than the Leica equivalents, indicating that they still haven't quite got it on size yet.
If the lens fares well on the A7/R, then the extra length will be less critical as there is no viewfinder frame to block, and it will be a million times more welcome than an Otis.