Company
Background
The Polaroid Corporation was founded in 1937 by
Edwin Land. While its early products focused on everything from eyewear to gun
sight filters, the company was most famous for its innovative instant film
cameras that hit the market in 1948. At the beginning, Polaroid technology was
used by military personnel, such as in aviator goggles. During the next three
decades, Polaroid became one of the most successful technology companies in the
post-war era.
After the war, Land was on a beach with his
daughter, who asked why she couldn’t print out photographs from a camera, so he
turned his attention to producing a product that could. This lead to the
creation of the Polaroid instant camera. The instant camera became widely used
both in the consumer market and in the business market for such purposes as
driver's licenses, crime reports, and real estate advertising. Now Polaroid's
core business is the design, manufacture, and sale of instant photographic
imaging products. In instant camera industry, Polaroid has been a synonym for
instant camera.
Industrial
Analysis
Photographic products including cameras,
camcorders, optical instruments and other photographic equipment. Leading
players on the world photographic products market include Fujifilm, Casio
Computer, Kodak, Sakar and Panasonic. Samsung, headquartered in South Korea,
employs over 220,000 people worldwide and operates almost 340 offices
throughout 58 countries. Leica, Hewlett-Packard, Sanyo, Sony and Toshiba are
also leaders on the market. Camera industry is only a market-line of the
photography industry. With technology constantly evolving to offer more options
and to greater ease of use, consumers are eager to keep up with the times.
Companies will continue investing in research and development to stay at the
industry’s cutting edge. In addition, demand will be driven by new
technologies. However, the market is also threaten by the development of
smartphones and other handheld devices. As smartphones and other handheld
devices like tablet PCs have cameras of increasingly better quality
incorporated, they will continue to eat into the camera market.
While within the camera industry, it was divided
by traditional film industry and digital camera division. Despite the dominance
of digital cameras, it hasn’t killed off film photography entirely. Instant
film is among the film segment. Unlike standard film, instant film doesn’t need
to be consistent. It was a one-step, one-minute process that produced a fully
finished photograph, something no one had ever seen before. This process was
the beginning of a new genre of creating photographs called instant
photography. Major players in this niche market are Polaroid, Kodak and Fuji.
Polaroid dominated the market for this unique and easy photographic process. By
1989, 42% of Polaroid's research and development funding was being spent on
digital imaging. By the late 1990s Polaroid was a top seller of instant
cameras. But unfortunately, Polaroid fails to adjust the business environment
as the introduction of digital camera to the masses in the late 90s. Technology
innovation change the big picture of the whole industry, but Polaroid did not
adjust to the market reality, between 2001 and 2009, Polaroid filed for
bankruptcy twice.
Supplier
Bargaining Power: Weak
As instant photography is belong to traditional
film industry, the supplier of instant camera companies are the film
manufactures. Instant cameras companies rely heavily on the traditional film
makers. As the shrink of the whole traditional film industry, more and more
companies have exit the industry, even though film makers are significant to
the instant cameras manufactures, the supplier bargaining power is still weak.
Also instant cameras makers can enter its suppliers’ industry to threat the
suppliers which drives the bargaining power of the suppliers is become even
weaker.
Threat
of New Entrants: Weak
Polaroid has dominated in the instant camera
industry already, currently Polaroid has become sign of instant camera
industry. So it is costly for competitors to enter into the industry to shake
the status of Polaroid. Brand loyalty is another barriers to entry. Polaroid
also won customers’ brand loyalty already. It is cost to shake a major players’
status and change customers’ brand preference. The greater the costs are that
potential competitors must bear to enter the industry. So the threat of new
entrants is weak.
Threat
of substitutes: Strong
As mentioned above in the industry overview
part, photographic companies will continue investing in research and
development to stay at the industry’s cutting edge and the market is also
threaten by the development of smartphones and other handheld devices.
Technology changes the big picture of the whole industry and customer habits.
The whole industry is changing rapidly and both dynamic and weak. So the threat
of substitutes are strong.
Industry
Rivalry: Strong
The competitive structure of an industry refers
to the number and size distribution of companies in it. In instant photography
industry, this niche market is dominated by a number of large companies (an
oligopoly) in this kind of industry, players are often in a position to
determine industry price. One company’s competitive action or move will
directly affect the market share of its rivals and thus their profitability.
Rivalry become strong as companies attempt to undercut each other’s prices or
offer customers more value in their products, pushing industry profits down in
the process.
Buyer
Bargaining Power: Strong
For Polaroid, its instant camera business is its
core business. The company’s profitability is heavily relies on the number of
instant camera sales. In other words, the company Polaroid depends on the
buyers for a large percentage of its total orders. In this situation the buyer
bargaining power is strong.
Journey
of Polaroid
February 21, 1947 – Edwin
Land demonstrated the instant camera at a meeting of the Optical Society of
America in New York City.
Conception of Land’s camera
1948 – Polaroid Land Camera
Model 95 was on sale at the Jordan Marsh department store in Boston for $89.75.
The Sales and profit of
Polaroid grew at an annual rate of 23% and 17% respectively when they launched
its instant film cameras to the market.
1963 – Polacolor file was
introduced to the market which enabled the cameras to produce color pictures.
1975 – Polaroid introduced
SX-70.
1977 – Polavision (instant movie system) was launched to the market in 1977.
1980 – Edwin Land resigned
as CEO of Polaroid.
2001 –Polaroid’s
stock price was decreased from $18 to -$6 in Q4 of 2000 that made them finally
needed to filed for Chapter 11 bankruptcy protection.
Reason of success of Polaroid
Had a great founder who always bring innovative ideas to the company
-
He started to invent the first instant camera by her daughter.
Discovery
Channel's "Invention"
Be the market leader of instant camera and film
-
Brand became the name of the end product itself
-
People said “Polaroid” to represent “a photography”
Market strategy of Polaroid – Differentiation
-
Built Polaroid as a cult status to maintain it’s competitive and increase
the loyalty of its customers. E.g. the Muppets appeared in a number of
commercials for Polaroid cameras that created a image of “Polaroid means fun”.
-
Worked with Ansel Adams, an internationally acclaimed landscape photography
and other artistes, photographers, etc. to establish Polaroid as a potential
art form.
Packaging of Polaroid SX-70
(Online Source: http://giam.typepad.com/the_branding_of_polaroid_/page/3/)
Reason of failure of Polaroid
Poor manufacturing decision
1)
Broke
off relations with Kodak
Polaroid decided to develop “opacifier” (chemical compound that would cover the picture when it had developed” by themselves so to make their relationship with Kodak became worse.
2)
Focused
on non-core part of instant camera
In
order to compete with Kodak, Polaroid decided to make their instant camera more
complex, they decide to fit battery to every film.
Due
to technology issue, they decided to produce battery in-house. Polaroid had become a fully
vertical-integrated manufacturing company.
Changing of market that make Polaroid lose most
of the market share
1)
More
affordable conventional cameras launched to the market
2)
Emergence
of one-hour photo shops
The strategy of
Polaroid is low cost of camera but costly films, so once the above trends were
appeared in the market in early of 80’s. The market share of Polaroid in US was
losing quickly because people could get high quality photos in an hour instead
of waiting a week. The quality of the photo is much cheaper and better than
Polaroid. From below chat, the total number of photos taken each year was
almost the same as “Polaroid” but it was falling down sharply in 2000 because
of the market has been changed. The number of photos taken each year was kept
raising with an increasing percentage.
Polaroid failed to
notice this market signal that was surely harm their business. Moreover, with
it slowly reaction to the market changing, they finally needed to file chapter
11 in 2001.
(Online Source: http://www.brainpickings.org/2012/09/27/instant-the-story-of-polaroid/)
Lack of market research so as to make them
became a late adopter
Land was focused
on engineering to see how to breakthrough some technical problems that bring
quality instant film to the market. However, he forgot to do market research to
understand the needs of his customers’ needs that make them difficult to change
themselves into a digital-imaging company and win back the market share that
losing because of the popular of home computers and digital cameras. People now
can not only take pictures but also can view them instantly and sent them to
your friends via computer at a comparative lower cost than using “Polaroid”.
The
Polaroid Corporation was once a very successful company on technology. In early
1950s, Polaroid had introduced the world’s first innovative instant film
cameras which was its greatest technological breakthrough. The cameras quickly
dominated the market after release and was rated one of the most innovative
products in that era that changed the life experience of many people. The
technology invented had very high potential driving up the sales of the cameras
bringing exponential profits to the company. One of the largest advantages of
using the instant film cameras is that it consumes instant films, which are
consumables made by Polaroid itself and also Kodak. The average retail price
point of Polaroid’s cameras was about $80 and the film itself costs about
$1.75, which was considered to be quite expensive relatively. Kodak was the
main manufacturer of instant films in the market that time and it monopolized
the market after Polaroid’s instant film camera become available. Billion rolls
of instant films were produced each year to cope with the rising demand. Kodak
firstly saw it as a great opportunity to ride on Polaroid’s back to enhance its
sales but ended up making a strategic decision to release its own instant film
cameras which are compatible with their own instant films. Kodak turned out to
be Polaroid’s major competitor in the industry.
Polaroid’s
instant film camera business had gone into an extremely difficult situation
after the invention of digital cameras in 1990s. The digital technology brought
the photo-taking experience from paper to computer. No consumables such as
instant films needed for functioning which makes the usage of digital cameras
more economical and planet friendly. Another advantage of digital cameras is
that they are lighter and more compact in size making it more convenient in
transportation. In a technological point of view, digital cameras allow the
user to choose and edit the taken photos whenever and wherever they desire. In
a functional perspective, digital cameras are installed with different settings
that well assist the user in shooting any kind of pictures under any kind of
situations, unlike Polaroid’s “one button” approach. Digital cameras had filled
in the gaps Polaroid’s instant film cameras failed to deliver since they first
hit the market.
Nowadays
in 2015, the consumer focuses on “smart” technology. All newly released phones
are integrated an digital camera, therefore, the desire on getting a separate
one is getting less and less. The world pays so much attention on the release
date of the next generation smart phones rather than expecting what Polaroid’s
instant film cameras are capable to offer in the near future. No doubt smart
devices are dominating the digital market and gradually replacing the open
price point digital cameras and most importantly, Polaroid’s instant film
cameras. Smart phones such as Apple’s IPhone and Samsung’s Galaxy change their
design and develop new innovative technologies in each generation to fit
consumers’ needs from time to time, including water resistance and finger print
security systems. Both manufacturers are very successful in capturing
consumers’ needs and expectation and applying on to their products. There are
so many designers and engineers working behind the screen in generating new
ideas on the outlook, interface, and technology on the phones in order to stay
competitive in the market. Polaroid is in comparative advantage due to the look
and function remains identical from years to years, without any impressive
development. Although Polaroid released its first digital camera in mid 1990s,
it was too late to retain the consumers and they lost the market share in the
industry.
The Forecast and Problems of Polavision
Polaroid is an innovation-driven company. Until
nowadays, Polaroid’s instant cameras remain among the most popular consumer-electronics
products. There was once a big move of Polaroid to extend the Polaroid – the
still image camera – into Polavision, which made instant movies by capturing an
amazing eighteen instant photos a second, courtesy of a handheld camera that
used handy film cartridges. (McCracken, 2009) And
thus in 1977, with the consistent efforts of its founder Edwin Land, after
years of development, the company launched Polavision instant movie. However, the
amazing engineering achievement brings a catastrophic failure.
Forecast by Polaroid on Polavision:
1. Innovation leads
the demand. The management team of Polaroid (actually mainly the founder, Edwin
Land) holds a belief that technology innovation always creating a consumer
demand. Edwin Land was convinced that he needed to take his instant photography
concept from the portrait camera to the movie camera. He believes that
Polavision will be as successful as SX-70, which dominates the market, so he
start the project and launch the Polavision in 1977. (Brown and Vestal, 2008)
2. Revolutionize
moviemaking. Land believed Polavision would revolutionize moviemaking. Polaroid
assumed that Polavision will occupy a unique position as an image-making
technology. They believed that Polavision would not only change the way movies
were made, but also would alter the way people perceived and experienced the
world. Following the development and commercial success of instant still
pictures, Polavision was touted as the “the second revolution in photography.”
just as instant still images, Polavision offer a “new way of responding moment
by moment to the scene around you”. (Czach, 2002)
3. The self-contained
system. Polaroid Company had dominated instant photography market for 30 years
until 1970s. They have shifted from the black-white format to color system. All
these products share the same system: a camera and a proprietary film pack.
This design was lucrative for the company because no others players could get
in. Under this consideration, Polavision was designed as a combination of a
movie camera, a film cassette, and a tabletop viewer. Every element of the
system was incompatible with the rest of the photographic industry. Even the
film could not be viewed with the incumbent projection equipment.
4. A new system for
television. In his attempt to map out a revolutionary new moving image terrain,
Land was insistent on developing a language specific to Polavision. The film was
not simply film but phototape, and the projector was not a projector but a
player. This new language aligned Polavision with both television and emergence
of mass consumer video technology. Land described the system as “the current
American modality of television”. While polavision claimed to offer the
convenience of television, it produced a photomechanical film image rather than
an electronic image.
Weak assumption behind the forecast
Despite
internal concerns, Polarvision was released to an under researched market and
was quickly overpowered. The management at Polaroid had not taken the necessary
precautions to reorganize their company structure for more productivity in a
new market. Once again, Polaroid released a product to market that had not been
properly given market research.
1. False belief on “Innovation
leads demand”. Many cases have shown that this theory does not work all the
time, especially when there are cheaper products that provide a similar
function.
2. Rising VCR
producers. VCR has started gaining mass market traction in 1975. Six major
firms were involved in the development of the VCR: RCA, JVC, AMPEX, Matsushita
Electric / Panasonic, Sony, and Toshiba. The VCR started to become a mass
market consumer product in late 1970s, so Polavision is not a unique product on
home movie shooting at that time. What is even worse, Polavision was costly
($675) and the movies it created were short (two minutes and forty seconds) and
without audio. The movie could only be watched on the bundled tabletop screen. Former
Polaroid freelancer Paul Giambarba remarked:“I tried using the product but
it was obviously a turkey compared to anything I was using that Kodak offered,
Instant movie film was an engineering achievement but it’s precisely what
separated Polaroid techies from Polaroid pragmatists. There just weren’t enough
customers out there on whom to work the magic.” (Lefler, 2010)
3. Self-contain
systems. Self-contain system deprived Polavision of the chance of being a
supplementary to the widespread Videocassette recorder in the late 1970s. One
observer wrote in 1979, he was curious to know if photo tape could be used with
the Kodak color film video players that play Super 8mm films through TV sets. If
it could, the Polavision camera would be a low-cost field camera. Quick
processing, the system could offer a supplementary module to a videotape
operation. However, it would not work. (Lohmann, 1979)
Factors
on forecast failure:
1. Being a charisma
founder and also leader of Polaroid, Edwin Land has too much influence on the
company. Even Polaroid’s president Bill McCune was highly skeptical on the
project, the project had been in the R&D pipeline for over a decade and was
championed personally by Edwin Land.
2. Past successful
experience made Polaroid careless in making market decisions. Polaroid's hubris
was assuming that customers would always want a physical copy of their photos,
which allowed the company to become too dependent on its instant film business.
3. Being blind on the
market. The incumbent president McCune felt that Polaroid was investing too
much into a new technology bet which “lacked any type of market research”
(Lefler, 2010).
Recommendations
1. Company should not
hold by a charisma leader. The power should be distributed.
2. Market research
before and during the development of new products is very important.
Reasons of Polaroid’s failure
Polaroid's
instant-film business started to fade to black in the mid-2000s. Sales declined
nearly 25 percent annually for several years. When the Polaroid film factory in
the Dutch town of Enschede shut down in June 2008, it signals that Polaroid
camera, one of the world’s most ingenious and popular innovations----Polaroid’s
instant camera could be history as digital cameras flooded the market.
Why
was Polaroid unable to capitalize on its success and unable to make the
transition to digital photography successfully? The fundamental reason is that
Polaroid’s top management did not follow and capture the market trend.
First,
Polaroid leaders believed that customers would always want a hard-copy print.
They deeply believed that as electronic imaging becomes more prevalent, there
remains a basic human need for a permanent visual record. Through the 1990s,
Polaroid executives continued to believe in the importance of the paper print.
When customers abandoned the print, Polaroid was taken by surprise. "It's
amazing, but kids today don't want hard copy anymore," said DiCamillo, CEO
from 1995 to 2001,"This was the major mistake we all made: Mac Booth, Gary
DiCamillo, people after me…. That was a major hypothesis that I believed in my
marrow that was wrong."
Second,
Polaroid’s managements failed to shit its business module. As instant film was
the core of financial model of this company. So if change Polaroid’s business
module, it means managements have to replace it with something that was equally
profitable or approximately as profitable. The instant film business profit
accounts for more than 65% of the company’s profits which created an obstacle
to think about new business models.
What we learn from Polaroid’s
failure
From
Polaroid’s fail experience we can acquire valuable experience that business
innovation is about new value, not new things. Innovation is relevant only if
it creates value for customers------and therefore for the firm. Thus creating
“new things” is neither necessary nor sufficient for business innovation.
Customers are the ones who decide the worth of an innovation by voting with
their wallets. It makes no difference how innovative a company thinks it is. Polaroid
did not have enough courage to replace its profitable business to shift its
business model and structure cause the end of itself. They forgot actually what
matters is whether customers will pay. The technology companies that succeed
will be those that have developed skills at listening and a sophisticated
understanding of their customers’ industries.
Polaroid’s
instant film business’ fail has some similar with the Nokia. Both of these
historical brands fail to react to the changing business environment. Top
managements did not capture the opportunities and react immediately when the
industry has changed. Technology development can both change the industry
profile and customers’ thinking and habits. When Edwin Land first invented his
camera and film, he imagined that instant photography would change people's
lives. He said that the camera should "go beyond amusement and
record-making to become a continuous partner of most human beings... a new eye,
and a second memory." Land did not realize how right he was. When he wrote
those words, the camera was a bulky appliance, and the print was stored in a
heavy album. Today the camera and hundreds of images, which are produced
instantly, can be carried in one lightweight device. Now that the camera has
been joined to the cell phone and other handheld devices, it is truly "a
continuous partner of most human beings." Ironically, the fulfilling of
Land's vision led to the end of his company.
How Polaroid help itself find
future in digital times
Now
Polaroid is working hard to find a future in the digital times. Polaroid has
tried to venture to find new product categories. They tried to enter into an
adjacent category and building around their core business. While the company’s
core business was instant photography, Polaroid has expanded beyond
photography; into tablets, televisions and other digital media. But Polaroid
had to tread carefully so as not to weaken the brand. It went through a process
of dissecting the brand’s DNA to understand the attributes of the brand and how
it was perceived by the customer. One of the success attempt is the television
business, Polaroid used its technology to produce the core component of the
technology that allows you to view the picture on a flat-screen TV. “Almost
every LCD flat-screen television has a polarizer on it.” Polaroid’s current CEO
Hardy said. With no doubt, Polaroid had paid great price for its mistake, now
this brand which has rich history is trying hard to stay its brands’ DNA as
well as to find a new business model at the same time.
Reference:
<Q&A
polaroid eyewear history & facts> 30 June 2011 marketing Week
<Finding
a Place for Polaroid in the digital age> Posted on August 14, 2013 by
Cassandra Rowbotham
<What
was Polaroid thinking?> Posted by the Yale University
<Polaroid,
Kodak, Apple: No One Escapes the Winds of Creative Destruction> Forbes, Sept
5, 2012.
http://www.forbes.com/sites/billfrezza/2012/09/05/polaroid-kodak-apple-no-one-escapes-the-winds-of-creative-destruction.
Czach, E
(2002). Polavision Instant Movies: Edwin Land's Quest for a New Medium. Moving
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