So I hear, although apparently it isn't. Leica have licensed just about everything from Fuji and based a lot of it on the mini evo, but they make it themselves. So they say. To be fair, a closer look and the build is different. The Leica has a Leica lens for example, and the body has an expensive glass finish. The photos I've seen online appear better than the ouput of cheaper Fuji and Polaroid offerings, but are still outshone by even the most budget of budget phones.
It seems that the main reason for the poor quality is the limited resolution of the film. Physically the particles it uses are far coarser than on conventional film. It's also very particular about exposure levels and has a very narrow bandwidth for exposures. It seems that back in the olden times, Polaroid instant film was superior in quality, but some of the chemicals used are no longer permitted.
That doesn't quite explain why the lenses on these cameras, Leica or otherwise, are so miniscule. The Leica lens has a diameter of 2.4 mm which is half what a modern camera phone uses. These two Fuji/Leica cameras are hybrids: they store images in memory and then expose film with an internal LED array on demand. Needless to say they use miniscule CMOS sensors, 2.9 by 2.2 mm so the resolution of around 5MP is pretty meaningless.
EDITED: 29 Jan 15:09 by WILLIAMA