How Polaroid Finds FUTURE Today?

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

Industry overview

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

(Online Source: from http://www.edn.com/electronics-blogs/edn-moments/4407362/Polaroid-introduces-the-instant-camera--February-21--1947)

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.

(Polaroid advert from 1975 / Flickr user Nesster)

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.

(Stock price of Polaroid in 2000 and 2001)

Reason of success of Polaroid

Had a great founder who always bring innovative ideas to the company

-          Land’s who was the founder of Polaroid. He was an inventor with many great innovative ideas came to the market. He received 535 United States patents.

-          He started to invent the first instant camera by her daughter.

http://electronics.howstuffworks.com/29594-invention-the-first-polaroid-camera-video.htm

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.

 

Advertising of Sesame Street (Online Source: http://muppet.wikia.com/wiki/Polaroid)

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.

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