Polaroid Corporation

views updated May 11 2018

Polaroid Corporation

549 Technology Square
Cambridge, Massachusetts 02139
U.S.A.
(617) 577-2000
Fax: (617) 577-5618

Public Company
Incorporated: 1937
Employees: 12,000
Sales: $2.15 billion
Stock Exchanges: New York Pacific
SICs: 3861 Photographic Equipment & Supplies; 3827 Optical Instruments & Lenses; 3851 Ophthalmic Goods; 3841 Surgical & Medical Instruments

Polaroid Corporation was founded on Edwin H. Land’s belief that consumer markets should be created around inventions generated by scientific research. His philosophy resulted in scientifically innovative products, some of which were fantastically profitable and others that were not commercially viable. Instant photography products, introduced in 1948, saved Land’s company from financial disaster and continue to be Polaroid’s principal source of income. After Polaroid stock plummeted in the 1970s, and with Land’s retirement in 1982, the succeeding team of managers, many of whom had built careers at Polaroid, began to reformulate Polaroid’s corporate culture. While the company continues to be a scientific innovator, it also has cultivated an aggressive marketing department, which bases product development on market research.

In 1926 Edwin Land’s desire to create useful products based on scientific invention prompted him to pursue independent research on polarization rather than to return to Harvard after his freshman year. After creating a prototype synthetic polarizer in New York, Land returned to Harvard in 1929. A polarizing material selectively screens light waves. It could, for example, block waves of light that create glare while allowing other waves through. With the help of George Wheelwright III, a young Harvard physics instructor, Land obtained access to a laboratory and began producing small sheets of polarizing material. Land applied to patent this process in 1929, and a patent was granted in 1934. In June of 1932, eager to explore the invention’s practical applications, Land and Wheelwright abandoned their academic careers and founded Land-Wheelwright Laboratories, backed with Wheelwright’s capital.

In 1933 the men incorporated their laboratory. Land-Wheelwright’s staff—Land, Wheelwright, their wives, and a handful of other researchers—concentrated on developing polarizing material for no-glare car headlights and windshields. Enthusiasm for their work ran high, but commercial success eluded the Land-Wheelwright crew. Rebuffed by carmakers in Detroit, the company had no customers during the height of the Great Depression.

Photography giant Eastman Kodak provided the company’s first financial break when it made a $10,000 order for photographic polarizing filters, later dubbed Polafilters. These plates, which consisted of a sheet of polarizing material sealed between two glass discs, increased contrast and decreased glare in photographs taken in bright light. Land-Wheelwright accepted the order and delivered the filters to Kodak. By this time, a friend, Professor Clarence Kennedy of Smith College, had dubbed the material “Polaroid,” and the name was adopted. In 1935 Land negotiated with American Optical Company to produce polarized sunglasses. Such glasses could screen out glare rather than simply darken the landscape, and Land-Wheelwright contracted to begin production of Polaroid Day Glasses, a longtime source of revenue for Polaroid.

In 1937 Land formed Polaroid Corporation to acquire the operations that he and George Wheelwright had begun. Eight original shareholders fronted $375,000 to back Land and his projects. They invested in Land and his ideas, allotting him a voting trust of stock that gave him control of the company for the next decade. Wheelwright left the company in 1940 to become a navy lieutenant and never rejoined the company. Researchers had devised a number of commercial applications for Polaroid polarizing sheets—such as desk lamps, variable-density windows, lenses, and three-dimensional photographs called Vecto-graphs—but most of these products never became significantly profitable.

Polaroid continued to court the major automakers, attempting to induce one of them to demonstrate its headlight system at the 1939 New York World’s Fair. The carmakers all refused the project, but Chrysler agreed to run a Polaroid three-dimensional (3-D) movie at its display. Audiences dodged water that seemed to spray out of a garden hose into the crowd and gawked through Polaroid-made glasses of oppositely polarized lenses as an automobile appeared to dance itself together in the air above them. The public loved 3-D, but filmmakers were content with the magic of color and sound, and passed over the new technology.

In another unsuccessful marketing project, variable-density windows were installed on the observation car of the City of Los Angeles. Two polarized discs were mounted in the train wall; by means of a knob, passengers could turn the inner disk so that the window gradually became grayer until it was completely dark. As with the 3-D process, the novelty of polarized windows was not hugely successful.

In 1939 Day Glasses were the source of most of Polaroid’s $35,000 profit. Although sales rose to $1 million in 1941, the company’s 1940 losses had reached $100,000, and it was only World War II military contracts that saved Land and his 240 employees. By 1942 the wartime economy had tripled Polaroid’s size. A $7 million navy contract to work on the Dove heat-seeking missile project was the largest contract Polaroid had ever had, although the bomb was not used during World War II. Polaroid produced a number of other products for the armed forces, including a device that determined an aircraft’s elevation above the horizon, an infrared night viewing device, goggles, lenses, color filters for periscopes, and range finders.

Also during the war, the 3-D technology was employed in a machine-gunner training unit. Polaroid designed a trainer in which the student operated a life-size anti-aircraft gun against the 3-D simulation of an attacking plane. Reconnaissance planes were equipped to take 3-D Vectographs, which provided relief maps of enemy territory. When viewed with polarized glasses, the 3-D pictures exposed contours of guns, planes, and buildings that camouflage obscured in conventional photographs. Vectographs were used in planning almost all Allied invasions, including that of Normandy. By the end of the war, in 1945, Polaroid’s sales had reached $16 million. But as military contracts declined, so did staff, and Polaroid was down to about 900 employees, from a wartime high of 1,250. Sales fell to just $4 million in 1946 and were less than $2 million in 1947.

By 1946 Land had realized that Polaroid Corporation was in deep trouble. Land also had come to believe that instant photography was Polaroid’s only research line with potential to save the company. Land had first considered developing instant photography technology in 1943, when, on Christmas day, his three-year-old daughter asked to see the photographs her parents had taken earlier that day. Prompted by his daughter’s query, Land conceived, in a flash, an instant, self-developing .film and a camera that would process it. By 1946, however, the research on the film was far from complete. Nonetheless, Land announced early that year that the instant camera system would be demonstrated at the February 21, 1947, winter meeting of the Optical Society of America. Working around the clock, Polaroid scientists developed a working model of the system, which allowed Land to take an instant picture of himself at the Optical Society meeting. The photograph developed itself within a minute. The image of Land peeling back the negative paper from an instantly produced picture of himself made front page news in the New York Times, was given a full page in Life magazine, and was splashed across the international press.

It was an additional nine months before the camera was offered to the public via Jordan Marsh, Boston’s oldest department store. The original camera, which weighed five pounds when loaded, sold for $89.75; film cost $1.75 for eight sepia-toned exposures. On the first day the camera was offered, demonstrators sold all 56 of the available units, and the cameras kept selling as fast as the factory could produce them. First-year photographic sales exceeded $5 million. By 1950 more than four thousand dealers sold Polaroid cameras, when only a year earlier Kodak had virtually monopolized the U.S. photography market.

The 1950s were a decade of rapid expansion. Sales mounted, spurred on by an aggressive television advertising campaign. Instant photography could be demonstrated graphically on television. Black-and-white film was introduced in 1950 to an enthusiastic public. Enthusiasm quickly turned to ire, however, as the black-and-white images began to fade and disappear. Unable to develop a non-fading black-and-white film, Polaroid provided sponge-tipped tubes of a liquid polymer, which the consumers hand applied to each picture to set the image. This awkward process was not eliminated until 1963.

Despite the inconvenience, demand for instant photography held. To accommodate growing sales, Polaroid built a plant in Waltham, Massachusetts. The company’s common stock was listed on the New York Stock Exchange in 1957. Polaroid formed its first international subsidiaries in 1959, in Frankfurt and Toronto. In 1960 it established Nippon Polaroid Kabushiki Kaisha in Japan and licensed a Japanese firm to produce two cameras for overseas sale.

During the 1960s Polaroid continued to offer improvements and variations on the original instant film and camera, although other products were also introduced. Polaroid’s first color film was introduced in 1963, along with a pack-loading black-and-white film. In 1965 the inexpensive Swinger was pitched to teens. Selling for less than $20, the camera took only black-and-white pictures, sustaining the market for Polaroid black-and-white film. In 1966 the ID-2 Land Identification system was introduced. It produced full-color laminated cards in two minutes, allowing the company to provide instant driver’s licenses and other photo identification cards. In 1967 Polaroid began construction on several new factories to boost production of cameras, film, color negatives, and chemicals. The company’s stock split two for one in 1968. During the late 1960s Polaroid was outpacing other top stock market performers. In 1970 sales reached $500 million.

In October of 1970 two black workers at Polaroid called upon other black employees to leave their jobs until Polaroid ceased all business in South Africa. Polaroid had no subsidiaries or investments in the country, but its products were distributed through Frank & Hirsch and some items were sold directly to the government. South African commerce accounted for less than 0.1 percent of the company’s annual profits. Polaroid sent two black and two white employees to South Africa to assess the situation, and in 1971 the company decided to stop selling its products to the South African government. In addition, black workers at Frank & Hirsch would receive equal pay for equal work and be educated for promotion. Polaroid established a foundation to subsidize black education in South Africa, and made $25,000 in contributions to black cultural associations. Polaroid ended its association with Frank & Hirsch in 1977.

In 1972 the October cover of Life magazine featured a cluster of children grasping after a photograph whizzing out of the new SX-70 wielded by inventor Land. The SX-70 was the first integrated camera and film system, and the pictures developed outside the camera by themselves. The public eagerly purchased the camera. Despite the fact that sales in the early 1970s continued to grow at a rate of 20 percent per year, the tremendous expense of research, manufacturing, and marketing for the SX-70 caused earnings to fall. Financial analysts began to question Polaroid’s stability. In 1974 Polaroid executives admitted that the company did not expect to make more than $3 a share that year. Actually, earnings were only 86 cents per share. Polaroid stock plummeted. By July of 1974, just 26 months after the SX-70 was introduced, the stock had fallen from 149½ to 14⅛.

In 1975 Land turned the presidency of Polaroid over to Bill McCune, a senior vice-president who had been with the company since 1939 and had worked closely with Land on the development of the first instant camera and film. Manufacture of the SX-70 remained very costly, and numerous design features required modification. Yet Land was satisfied with the camera and wished to pursue research on Polavision, an instant motion picture system. McCune and others, however, favored improving the SX-70. Highly skeptical of Polavision, McCune wanted to base new product lines on market research, rather than following Land’s method of creating a consumer demand for Polaroid’s latest invention. Land introduced Polavision at the 1977 annual meeting, and a limited introduction followed. Although a scientific marvel, the instant films lasted only two and a half minutes and were silent. Videotaping was just hitting the market, and so Polavision was never a consumer success.

Land received his 500th patent and was inducted to the National Inventors Hall of Fame in 1977. Polaroid’s corporate culture began to shift when McCune was voted chief executive officer in 1980. While Land’s entrepreneurial drive had created the company, a more diversified, market-oriented management was needed to continue to propel it. In 1982 Land retired fully, devoting his attention to research at the Rowland Institute for Science, which he had founded in 1965.

In 1976 Polaroid entered a costly and lengthy patent-infringement battle with Eastman Kodak Company. Kodak had been producing the negative component of Polaroid’s black-and-white film since 1944, and its color negative since 1957. With the introduction of the Polaroid SX-70, though, Kodak terminated its partnership with Polaroid, and began its own instant-photography research. In 1976 Kodak introduced the EK-4 and EK-6 instant cameras and PR-10 instant film. Polaroid filed suit within a week, charging 12 patent infringements in camera film and design.

Legal preparations dragged on for five years, until the trial began in October of 1981. Ten of the twelve original counts were pressed. After 75 days of testimony and three years of deliberation, U.S. District Court Judge Rya Zobel ruled that seven of the ten Polaroid patents were valid and had been infringed upon. As a result, Kodak’s line of instant-photography products was terminated in 1986. When settlement talks began, Polaroid claimed about $6.1 billion in damages, lost sales, and interest. The case was not settled until 1991 and resulted in a payment by Eastman Kodak of $925 million.

In August of 1988 Shamrock Holdings offered to buy Polaroid at $40 a share plus 40 percent of the award from the Kodak settlement. Polaroid’s board of directors rejected the offer, and soon after the company sold 14 percent of its outstanding shares to an employee stock ownership program (ESOP). Shamrock charged that the ESOP was a form of management entrenchment, and sued. Delaware courts upheld Polaroid’s position, and Shamrock raised its offer to $45 a share. Polaroid’s board again rejected the offer and subsequently announced a $1.1 .billion common stock buy-back. Shamrock again sued Polaroid in February of 1989 for management entrenchment, but Polaroid’s tactics were again upheld. The fight against Shamrock was led by Chairman McCune and I. MacAllister Booth, who had become president in 1983 and CEO in 1985. The pair pruned Polaroid staff in the early 1980s and reorganized the company into three divisions: consumer photography, industrial photography, and magnetic media.

The first success reaped from this new marketing strategy was the Spectra, introduced in 1986. The upscale Spectra came out of market research indicating that instant camera users wanted better picture quality. Again responding to this desire, Polaroid introduced Hybrid IV, an instant film of near 35-millimeter quality, during the early 1990s. Polaroid also introduced a line of conventional film and videotapes starting in 1989. Marketing strategies also continued to become more sophisticated. In 1990 a $60 million advertising campaign emphasized new uses for instant cameras. Suggested uses include recording household items for insurance purposes or keeping a visual record of properties when house-hunting. In addition, the company cultivated its non-consumer markets, which contribute at least 40 percent of photographic sales.

While Polaroid’s product lines may be more fully guided by market demand, Polaroid continues to be a research-and-development driven company. It was Booth’s hope that market research would generate stable, profit-making ventures, as Polaroid carries Land’s creative scientific spirit into the 1990s. At the dawn of the 21st century, the Polaroid Corporation has become the world market leader in instant photography, electronic imaging, and a major world manufacturer and marketer of conventional films, videotapes, and light polarizing filters and lenses. Such a high proportion (approximately half) of Polaroid’s revenues derive from international sales that the company survived the worst year of the U.S. recession, 1991, with flying colors, making the recession period one of the best ever in terms of sales. For the first time in Polaroid’s history, the $2 billion dollar sales mark had been surpassed. With the resurgence of the domestic economy and the onset of recession in Europe and Japan, the company expects its global positioning to assist in its financial performance. By the mid-1990s, the company will have undergone the biggest plant expansion in its history that includes the construction of its first ever facility for the production of advanced films for Polaroid’s new electric imaging products.

Along with major plant expansion, Polaroid has embarked on a new marketing and advertising strategy that targets market segments (business, health, industry, education, family) and promotes new products designed specifically for these segments. In fact, the blitz of new Polaroid products has surprised market analysts accustomed, over the past two decades, to criticizing Polaroid’s stagnation and moribund sales.

Polaroid products fall under the categories of core photography and high resolution imaging. Polaroid clearly has shifted away from its total reliance on its historical mainstay, the instant camera. Gone forever are the days of focusing on a single product. The company’s potentially most lucrative product is the Helios medical laser imaging system, which produces a medical diagnostic image without chemical processing. Another new and promising but far less expensive medical imaging product, the Polaroid EMS Photo Kit, is a camera specifically designed for the 35,000 emergency medical team (EMT) squads in the United States. A series of new electronic imaging products also have been developed for the business segment, including desktop computer film recorders, the Polaroid CI-5000 and CI-3000, and the CS-500Í Digital Photo Scanner. In addition, Polaroid has developed the ProCam, an instant camera earmarked for the business customer.

For the nonprofessional or amateur consumer, the long awaited “Joshua” instant camera was introduced first in Europe in 1992, and then in the United States as “Captiva” in the summer of 1993. Captiva, indistinguishable in appearance from a 35 millimeter camera, takes high quality instant photos that are not ejected in the usual manner, but stored in the rear of the camera, which in turn contains a viewing window enabling the user to see the development of the last exposed frame. Because the photos are smaller than regular-sized 35 millimeter pictures, the camera appeals to those whose lifestyles favor a more compact and instant camera. “HighDefinition” instant film for the amateur photographer came on the market in 1992, further closing the gap in quality between 35 millimeter and instant film. Despite market analyst predictions, Polaroid Corporation has transformed itself into a company of the future: a streamlined, multinational, and diverse, multi-product company.

Principal Subsidiaries

Inner City, Inc.; Olint, Inc.; Polaroid Caribbean; Polaroid Foundation; Polaroid Ges.m.b.H. (Austria); Polaroid (Belgium) N.V.; Polaroid AS (Denmark); Polaroid (U.K.) Ltd.; Polaroid (France) S.A.; Polaroid GmbH (Germany); Polaroid (Italia) S.p.A.; Polaroid AB (Sweden);

Polaroid AG (Switzerland); Polaroid Australia Pty. Ltd.; Polaroid Far East Ltd. (Hong Kong); Nippon Polaroid K.K. (Japan); Polaroid do Brasil Ltda. (Brazil); Polaroid Canada Inc.; Polaroid de Mexico, S.A. de C.V.; Polaroid España, S.A. (Spain); Polaroid (Europa) B.V. (Netherlands); Polaroid (Norge) A/S (Norway); Polaroid Oy (Finland); Polaroid Singapore Private Ltd. (Singapore).

Polaroid Corporation

views updated Jun 08 2018

Polaroid Corporation

549 Technology Square
Cambridge, Massachusetts 02139
U.S.A.
(617) 577-2000
Fax: (617) 494-0249

Public Company
Incorporated: 1933 as Land-Wheelwright Laboratories
Employees: 11,441
Sales: $1.90 billion
Stock Exchanges: New York Pacific

Polaroid was founded on Edwin H. Land’s belief that consumer markets should be created around inventions generated by scientific research. His philosophy often resulted in products that were scientifically innovative but not commercially viable. Instant photography products, introduced in 1947, saved Land’s company from financial disaster and continue to be Polaroid’s principal source of income. Polaroid stock plummeted in the 1970s. With Land’s retirement in 1982, the succeeding team of managers, many of whom had built careers at Polaroid, began to reformulate Polaroid’s corporate culture. While the company continues to be a scientific innovator, it also has cultivated an aggressive marketing department, which bases product development on market research.

In 1926 Edwin Land’s desire to create a commercial monopoly based on scientific invention prompted him to pursue independent research on polarization rather than to return to Harvard after his freshman year. After creating a prototype synthetic polarizer in New York, Land returned to Harvard, in 1929. A polarizing material selectively screens light waves. It could, for example, block waves of light that create glare while allowing other waves through. With the help of George Wheelwright III, a young Harvard physics instructor, Land obtained access to a laboratory and began producing small sheets of polarizing material. Land applied to patent this process in 1929, and a patent was granted in 1934. In June of 1932, eager to explore the invention’s practical applications, Land and Wheelwright abandoned their academic careers and founded Land-Wheelwright Laboratories, backed with Wheelwright’s capital.

In 1933, the men incorporated their laboratory. Land-Wheelwright’s staff—Land, Wheelwright, their wives, and a handful of other researchers—concentrated on developing polarizing material for no-glare car headlights and windshields. Enthusiasm for their work ran high, but commercial success eluded the Land-Wheelwright crew. Rebuffed by carmakers in Detroit, the company had no customers during the height of the Great Depression.

Photography giant Eastman Kodak provided the company’s first financial break when it made a $10,000 order for photographic polarizing filters, later dubbed Polafilters. These plates, which consisted of a sheet of polarizing material sealed between two glass discs, increased contrast and decreased glare in photographs taken in bright light. Despite the fact that it had no machinery to mass produce such filters, Land-Wheelwright accepted the order, developed and built machines necessary to produce polarizing sheets and bond it to glass discs, and delivered the order to Kodak on schedule. By this time, a friend had christened the material “Polaroid,” and the name was adopted. In 1935 Land convinced American Optical Company to produce polarized sunglasses. Such glasses could screen out glare rather than simply darken the landscape, and Land-Wheelwright contracted to begin production of Polaroid Day Glasses, a long-time source of revenue for Polaroid.

Land formed Polaroid Corporation in 1937 to acquire Land-Wheelwright Laboratories. Eight original share-holders fronted $375,000 to back Land and his projects. They invested in Land and his ideas, allotting him a voting trust of stock that gave him control of the company for the next decade. Wheelwright left the company in 1940 to become a navy lieutenant, and never rejoined the firm. Researchers had devised a number of commercial applications for Polaroid— such as lamps, windows, stage lights, and three-dimensional photographs called Vectographs—but most of these products never became significantly profitable.

Polaroid continued to court the major automakers, attempting to induce one of them to demonstrate its headlight system at the 1939 New York World’s Fair. The carmakers all refused the project, but Chrysler agreed to run a Polaroid three-dimensional (3-D) movie at its display. Audiences dodged water that seemed to spray out of a garden hose into the crowd and gawked through chunky Polaroid-made glasses of oppositely polarized lenses as an automobile appeared to dance itself together in the air above them. The public loved 3-D, but filmmakers were content with the magic of color and sound, and passed over the new technology.

In another unsuccessful marketing project, variable-density windows were installed on the observation car of the City of Los Angeles. Two polarized discs were mounted in the train wall; by means of a knob, passengers could turn the inner disk so that the window gradually became grayer until it was completely dark. As with 3-D film, the novelty of polarized windows was not commercially viable.

In 1939, Day Glasses were the source of most of Polaroid’s $35,000 profit. Although sales rose to $1 million in 1941, the company’s 1940 losses had reached $100,000, and it was only World War II military contracts that saved Land and his 240 employees. By 1942, the wartime economy had tripled Polaroid’s size. A $7 million navy contract to work on the Dove heat-seeking missile project was the largest contract Polaroid had ever had, although the bomb was not used during World War II. Polaroid produced a number of other products for the armed forces, including a device that determined an aircraft’s elevation above the horizon, an infrared night viewing device, goggles, lenses, and color filters for periscopes, and rangefinders.

Also during the war, the 3-D technology forsaken by moviemakers was employed in a machine-gunner training unit. Polaroid designed a trainer in which the student operated a life-size anti-aircraft gun against the 3-D simulation of an attacking plane. Reconnaissance planes were equipped to take 3-D Vectographs, which provided relief maps of enemy territory. When viewed with polarized glasses, the 3-D pictures exposed contours of guns, planes, and buildings that camouflague obscured in conventional photographs. Vectographs were used in planning almost all Allied invasions, including that of Normandy.

By the end of the war, in 1945, Polaroid’s sales had reached $16 million, but as military contracts declined, so did staff, and Polaroid was down to about 500 employees, from a war-time high of 1,250. Sales fell to just $4 million in 1946 and were less than $2 million in early 1947.

By 1946 Land had realized that Polaroid Corporation was in deep trouble. Land had also come to believe that instant photography was Polaroid’s only research line with potential to save the company. The research, however, was far from complete. In desperation Land announced in early 1946 that the instant camera system would be demonstrated at the February 21, 1947, winter meeting of the Optical Society of America. Working around the clock, Polaroid scientists developed a working model of the system, which allowed Land to take an instant picture of himself at the Optical Society meeting. The photograph developed itself within a minute. The image of Land peeling back the negative paper from an instantly produced picture of himself made front page news in The New York Times, was given a full page in Life, and was splashed across the international press.

Land had first considered developing instant-photography technology in 1943, when, on Christmas day, his three-year-old daughter asked to see the photographs her parents had taken earlier that day. Prompted by his daughter’s query, Land conceived, in a flash, an instant, self-developing film and a camera that would process it.

It was an additional nine months before the camera was offered to the public via Jordan Marsh, Boston’s oldest department store. The original camera, which weighed five pounds when loaded, sold for $89.75; film cost $1.75 for eight sepia-toned exposures. On the first day the camera was offered, demonstrators sold all 56 of the available units, and the cameras kept selling as fast as the factory could produce them. First-year photographic sales exceeded $5 million. By 1950 more than four thousand dealers sold Polaroid cameras, when only a year earlier Kodak had virtually monopolized the U.S. photography market.

The 1950s were a decade of rapid expansion. Sales mounted, spurred on by an aggressive television advertising campaign. Instant photography could be demonstrated graphically on television. Black-and-white film was introduced in 1950 to an enthusiastic public. Enthusiasm quickly turned to ire, however, as the black-and-white images began to fade and disappear. Unable to develop a non-fading black-and-white film, Polaroid provided sponge-tipped tubes of a liquid polymer, which the consumers hand-applied to each picture to set the image. This awkward process was not eliminated until 1963.

Despite the inconvenience, demand for instant photography held. To accomodate growing sales, Polaroid built a plant in Waltham, Massachusetts. The company’s common stock was listed on the New York Stock Exchange in 1957. Polaroid formed its first international subsidiaries in 1959, in Frankfurt and Toronto. In 1960 it established Nippon Polaroid Kabushiki Kaisha in Japan, and licensed a Japanese firm to produce two cameras for overseas sale.

During the 1960s Polaroid continued to offer improvements and variations on the original instant film and camera, although other products were also introduced. Polaroid’s first color film was introduced in 1963, along with a non-fading black-and-white film. In 1965 the inexpensive Swinger was pitched to teens. Selling for less than $20, the camera took only black-and-white pictures, sustaining the market for Polaroid black-and-white film. In 1966 the ID-2 Land Identification system was introduced. It produced full-color, laminated identification cards in two minutes. In 1967 Polaroid began construction on several new factories, to boost production of cameras, film, color negatives, and chemicals. The company’s stock split two for one in 1968. During the late 1960s Polaroid was outpacing other top stock market performers. In 1970 sales reached $500 million.

In October 1970 two prominent black workers at Polaroid called on other black employees to leave their jobs until Polaroid ceased all business in South Africa. Polaroid had no subsidiaries or investments in the country, but its products were distributed through Frank & Hirsch. Some items were sold directly to the government, which used them in creating passbooks, part of the identification system that contributes to apartheid. South African commerce accounted for less than 0.1% of the company’s annual profits.

Polaroid sent two black and two white employees to South Africa to assess the situation. In 1971 based on sentiments expressed by black South Africans, the company decided to maintain its business in South Africa, but stopped selling its products to the government. In addition, black workers at Frank & Hirsch would receive equal pay for equal work and be educated for promotion. Polaroid established a foundation to subsidize black education in South Africa, and made $25,000 in contributions to black cultural associations. These efforts were not popular with many Americans, who favored total boycott of the South African economy until apartheid was ended. Polaroid continued its association with Frank & Hirsch until 1977, when the distributor was found to be selling products to the government once again, and Polaroid terminated the relationship.

The October 1972 cover of Life featured a cluster of children grasping after a photograph whizzing out of the new SX-70 wielded by inventor Land. The public eagerly purchased the camera, yet Polaroid stock price began to decline shortly after the introduction of the SX-70, mostly due to a general stock market decline. Despite the fact that sales in the early 1970s continued to grow at a rate of 20% per year, the tremendous expense of research, manufacturing, and marketing for the SX-70 caused earnings to fall. Financial analysts, who had always received Polaroid stock coolly, began to question Polaroid’s stability. In a 1974 conference Polaroid executives admitted that it did not expect to make more than $3 a share that year. In actuality, earnings were only 86¢ per share. Polaroid stock plummeted. By July 1974, just 26 months after the SX-70 was introduced, the stock had fallen from 1491/2 to 141/8.

In 1975 Land turned the presidency of Polaroid over to Bill McCune, a senior vice president who had been with the company since 1939 and had worked closely with Land on the development of the first instant camera and film. Manufacture of the SX-70 remained very costly, and numerous design features required modification. Yet Land was satisfied with the camera and wished to pursue research on Polavision, an instant motion picture system. McCune and others, however, favored improving the SX-70. Highly skeptical of Polavision, McCune wanted to base new product lines on market research, rather than following Land’s method of creating a consumer demand for Polaroid’s latest invention. Land introduced Polavision at the 1977 annual meeting and a limited introduction followed. Although a scientific marvel, the instant films lasted only two and half minutes and were silent. Videotaping was just hitting the market, and so Polavision was never a consumer success.

Land received his 500th patent and was inducted to the National Inventors Hall of Fame in 1977. Polaroid’s corporate culture began to shift when McCune was voted chief executive officer in 1980. While Land’s entrepreneurial drive had created the company, a more diversified, market-oriented management was needed to continue to propel it. In 1982 Land retired fully, devoting his attention to research at the Rowland Institute for Science, which he had established in 1965.

In 1976 Polaroid entered a costly and lengthy patent-infringement battle with Eastman Kodak Company. Kodak had been producing the negative component of Polaroid’s black-and-white film since 1944, and its color negative since 1957. Shortly after viewing the SX-70 film prototype in 1968, however, Kodak terminated its partnership with Polaroid, and began its own instant-photography research. In 1976 Kodak introduced the EK-4 and EK-6 instant cameras and PR-10 instant film. Polaroid filed suit within a week, charging 12 patent infringements in camera film and design.

Legal preparations dragged on for five years, until the trial began in October 1981. Ten of the twelve original counts were pressed. After 75 days of testimony and three years of deliberation, U.S. District Court Judge Rya Zobel ruled that seven of the ten Polaroid patents were valid and had been infringed upon. As a result, Kodak’s line of instant-photography products was terminated in 1986. When settlement talks began, Polaroid claimed about $6.1 billion in damages, lost sales, and interest.

In August 1988, Shamrock Holdings offered to buy Polaroid at $40 a share plus 40% of the award from the Kodak settlement. Polaroid refused the offer and soon after sold 14% of its outstanding shares to an employee stock ownership program (ESOP). Shamrock charged that the ESOP was a form of management entrenchment, and sued. Delaware courts upheld Polaroid’s position, and Shamrock raised its offer to $45 a share. Polaroid again refused, and subsequently announced a $1.1 billion common-stock buy-back. Shamrock again sued Polaroid in February 1989, for management entrenchment, but Polaroid’s tactics were again upheld.

The fight against Shamrock was lead by Chairman McCune and I. MacAllister Booth, who had become president in 1983 and CEO in 1986. The pair pruned Polaroid staff in the early 1980s and reorganized the company into three divisions: consumer, industrial, and magnetic products.

The first success reaped from this new marketing strategy was the Spectra, introduced in 1986. The up-scale Spectra came out of market research indicating that instant-camera users wanted better picture quality. Again responding to this desire, Polaroid introduced Hybrid IV, an instant film of near 35-milimeter quality, during the early 1990s. Polaroid also introduced a line of conventional film and videotapes.

Marketing strategies also continued to become more sophisticated. In 1990 a $60 million advertising campaign emphasized new uses for instant cameras. Suggested uses include recording household items for insurance purposes or keeping a visual record of properties when house-hunting. In addition, the company is cultivating its commercial markets, which contribute at least 40% of photographic sales.

While Polaroid’s product lines may be more fully guided by market demand, Polaroid continues to be a research-and-development-driven company. In 1990 research focused on an electric camera, which stores images on magnetic disc rather than film; an area in which the company may profit from joint ventures. Other promising projects include Helios, a new medical imaging system that the company thinks could be very profitable; Joshua, a mini-camera that produces credit-card size pictures; and a printer that coverts television images to hard copy. It is Booth’s hope that market research will generate stable, profit-making ventures, as Polaroid carries Land’s creative scientific spirit into the 1990s.

Principal Subsidiaries

Inner City, Inc.; Mag Media, Ltd.; Media Duplication Services, Ltd.; Polaroid Caribbean; Polaroid Foundation; Polaroid Ges.m.b.H. (Austria); Polaroid S.A. (Belgium); Polaroid AS (Denmark); Polaroid U.K. Ltd.; Polaroid S.A. (France); Polaroid GmbH (Germany); Polaroid S.p.A. (Italy); Polaroid Nederland B.V. (Netherlands); Polaroid AB (Sweden); Polaroid AG (Switzerland); Polaroid Australia Pty. Ltd.; Polaroid Far East Ltd. (Hong Kong); Nippon Polaroid K.K. (Japan); Polaroid do Brasil Ltda. (Brazil); Polaroid Canada Inc.; Polaroid de Mexico, S.A. de C.V.

Polaroid Corporation

views updated May 17 2018

Polaroid Corporation

549 Technology Square
Cambridge, Massachusetts 02139
U.S.A.
(781) 386-2000
Fax: (781) 386-3924
Web site: http://www.polaroid.com

Public Company
Incorporated : 1937
Employees : 10,011
Sales : $1.85 billion (1998)
Stock Exchanges :New York Pacific
Ticker Symbol : PRD
NAIC : 333315 Photographic & Photocopying Equipment Manufacturing; 333314 Optical Instrument & Lens Manufacturing; 339115 Ophthalmic Goods Manufacturing

Polaroid Corporation, founded on Edwin H. Land’s belief that consumer markets should be created around inventions generated by scientific research, is a world leader in instant photography. The company manufactures and sells more than 50 types of film and more than 100 cameras and instant camera accessories. Instant photography products, since their 1948 debut, have consistently provided the bulk of Polaroid’s income. Other operations, which the company announced in early 1999 that it may jettison, include sunglasses, graphic arts, glare-reducing polarizers, and holography.

Beginnings in Polarization Research

In 1926 Edwin Land’s desire to create useful products based on scientific invention prompted him to pursue independent research on polarization rather than to return to Harvard after his freshman year. After creating a prototype synthetic polarizer in New York, Land returned to Harvard in 1929. A polarizing material selectively screens light waves. It could, for example, block waves of light that create glare while allowing other waves through. With the help of George Wheelwright III, a young Harvard physics instructor, Land obtained access to a laboratory and began producing small sheets of polarizing material. Land applied to patent this process in 1929, and a patent was granted in 1934. In June 1932, eager to explore the invention’s practical applications, Land and Wheelwright abandoned their academic careers and founded Land-Wheelwright Laboratories, backed with Wheelwright’s capital.

In 1933 the men incorporated their laboratory. Land-Wheelwright’s staff—Land, Wheelwright, their wives, and a handful of other researchers—concentrated on developing polarizing material for no-glare car headlights and windshields. Enthusiasm for their work ran high, but commercial success eluded the Land-Wheelwright crew. Rebuffed by carmakers in Detroit, the company had no customers during the height of the Great Depression.

Photography giant Eastman Kodak provided the company’s first financial break when it made a $10,000 order for photographic polarizing filters, later dubbed Polafilters. These plates, which consisted of a sheet of polarizing material sealed between two glass discs, increased contrast and decreased glare in photographs taken in bright light. Land-Wheelwright accepted the order and delivered the filters to Kodak. By this time, a friend, Professor Clarence Kennedy of Smith College, had dubbed the material “Polaroid,” and the name was adopted. In 1935 Land negotiated with American Optical Company to produce polarized sunglasses. Such glasses could screen out glare rather than simply darken the landscape, and Land-Wheelwright contracted to begin production of Polaroid Day Glasses, a longtime source of revenue for Polaroid.

In 1937 Land formed Polaroid Corporation to acquire the operations that he and George Wheelwright had begun. Eight original shareholders fronted $375,000 to back Land and his projects. They invested in Land and his ideas, allotting him a voting trust of stock that gave him control of the company for the next decade. Wheelwright left the company in 1940 to become a navy lieutenant and never rejoined the company. Researchers had devised a number of commercial applications for Polaroid polarizing sheets—such as desk lamps, variable-density windows, lenses, and three-dimensional photographs called Vectographs—but most of these products never became significantly profitable.

Polaroid continued to court the major automakers, attempting to induce one of them to demonstrate its headlight system at the 1939 New York world’s Fair. The carmakers all refused the project, but Chrysler agreed to run a Polaroid three-dimensional (3-D) movie at its display. Audiences dodged water that seemed to spray out of a garden hose into the crowd and gawked through Polaroid-made glasses of oppositely polarized lenses as an automobile appeared to dance itself together in the air above them. The public loved 3-D, but filmmakers were content with the magic of color and sound, and passed over the new technology.

In another unsuccessful marketing project, variable-density windows were installed on the observation car of the City of Los Angeles. Two polarized discs were mounted in the train wall; by means of a knob, passengers could turn the inner disk so that the window gradually became grayer until it was completely dark. As with the 3-D process, the novelty of polarized windows was not hugely successful.

Contributed to World War II Effort

In 1939 Day Glasses were the source of most of Polaroid’s $35,000 profit. Although sales rose to $1 million in 1941, the company’s 1940 losses had reached $100,000, and it was only World War II military contracts that saved Land and his 240 employees. By 1942 the wartime economy had tripled Polaroid’s size. A $7 million navy contract to work on the Dove heat-seeking missile project was the largest contract Polaroid had ever had, though the bomb was not used during World War II. Polaroid produced a number of other products for the Armed Forces, including a device that determined an aircraft’s elevation above the horizon, an infrared night viewing device, goggles, lenses, color filters for periscopes, and range finders.

Also during the war, the 3-D technology was employed in a machine-gunner training unit. Polaroid designed a trainer in which the student operated a life-size antiaircraft gun against the 3-D simulation of an attacking plane. Reconnaissance planes were equipped to take 3-D Vectographs, which provided relief maps of enemy territory. When viewed with polarized glasses, the 3-D pictures exposed contours of guns, planes, and buildings that camouflage obscured in conventional photographs. Vectographs were used in planning almost all Allied invasions, including that of Normandy. By the end of the war, in 1945, Polaroid’s sales had reached $16 million. But as military contracts declined, so did staff, and Polaroid was down to about 900 employees, from a wartime high of 1,250. Sales fell to just $4 million in 1946 and were less than $2 million in 1947.

1948 Debut of Instant Photography Saved Company

By 1946 Land had realized that Polaroid Corporation was in deep trouble. Land also had come to believe that instant photography was Polaroid’s only research line with potential to save the company. Land had first considered developing instant photography technology in 1943, when, on Christmas day, his three-year-old daughter asked to see the photographs her parents had taken earlier that day. Prompted by his daughter’s query, Land conceived, in a flash, an instant, self-developing film and a camera that would process it. By 1946, however, the research on the film was far from complete. Nonetheless, Land announced early that year that the instant camera system would be demonstrated at the February 21, 1947 winter meeting of the Optical Society of America. Working around the clock, Polaroid scientists developed a working model of the system, which allowed Land to take an instant picture of himself at the Optical Society meeting. The photograph developed itself within a minute. The image of Land peeling back the negative paper from an instantly produced picture of himself made front page news in the New York Times, was given a full page in Life magazine, and was splashed across the international press.

It was an additional nine months before the camera was offered to the public via Jordan Marsh, Boston’s oldest department store. The original camera, which weighed five pounds when loaded, sold for $89.75; film cost $1.75 for eight sepia-toned exposures. On the first day the camera was offered, demonstrators sold all 56 of the available units, and the cameras kept selling as fast as the factory could produce them. First-year photographic sales exceeded $5 million. By 1950 more than 4,000 dealers sold Polaroid cameras, when only a year earlier Kodak had virtually monopolized the U.S. photography market.

The 1950s were a decade of rapid expansion. Sales mounted, spurred on by an aggressive television advertising campaign. Instant photography could be demonstrated graphically on television. Black-and-white film was introduced in 1950 to an enthusiastic public. Enthusiasm quickly turned to ire, however, as the black-and-white images began to fade and disappear. Unable to develop a nonfading black-and-white film, Polaroid provided sponge-tipped tubes of a liquid polymer, which the consumers hand applied to each picture to set the image. This awkward process was not eliminated until 1963.

Despite the inconvenience, demand for instant photography held. To accommodate growing sales, Polaroid built a plant in Waltham, Massachusetts. The company’s common stock was listed on the New York Stock Exchange in 1957. Polaroid formed its first international subsidiaries in 1959, in Frankfurt and Toronto. In 1960 it established Nippon Polaroid Kabushiki Kaisha in Japan and licensed a Japanese firm to produce two cameras for overseas sale.

Company Perspectives

We are reinventing Polaroid and the way we approach customers, while at the same time digital technology is enabling new ways to create and use images.

During the 1960s Polaroid continued to offer improvements and variations on the original instant film and camera, though other products were also introduced. Polaroid’s first color film was introduced in 1963, along with a pack-loading black-and-white film. In 1965 the inexpensive Swinger was pitched to teens. Selling for less than $20, the camera took only black-and-white pictures, sustaining the market for Polaroid black-and-white film. In 1966 the ID-2 Land Identification system was introduced. It produced full-color laminated cards in two minutes, allowing the company to provide instant driver’s licenses and other photo identification cards. In 1967 Polaroid began construction on several new factories to boost production of cameras, film, color negatives, and chemicals. The company’s stock split two for one in 1968. During the late 1960s Polaroid was outpacing other top stock market performers. In 1970 sales reached $500 million.

In October 1970 two black workers at Polaroid called upon other black employees to leave their jobs until Polaroid ceased all business in South Africa. Polaroid had no subsidiaries or investments in the country, but its products were distributed through Frank & Hirsch and some items were sold directly to the government. South African commerce accounted for less than 0.1 percent of the company’s annual profits. Polaroid sent two black and two white employees to South Africa to assess the situation, and in 1971 the company decided to stop selling its products to the South African government. In addition, black workers at Frank & Hirsch would receive equal pay for equal work and be educated for promotion. Polaroid established a foundation to subsidize black education in South Africa, and made $25,000 in contributions to black cultural associations. Polaroid ended its association with Frank & Hirsch in 1977.

SX-70 Debuted in 1972

In 1972 the October cover of Life magazine featured a cluster of children grasping after a photograph whizzing out of the new SX-70 wielded by inventor Land. The SX-70 was the first integrated camera and film system, and the pictures developed outside the camera by themselves. The public eagerly purchased the camera. Despite the fact that sales in the early 1970s continued to grow at a rate of 20 percent per year, the tremendous expense of research, manufacturing, and marketing for the SX-70 caused earnings to fall. Financial analysts began to question Polaroid’s stability. In 1974 Polaroid executives admitted that the company did not expect to make more than $3 a share that year. Actually, earnings were only 86 cents per share. Polaroid stock plummeted. By July 1974, just 26 months after the SX-70 was introduced, the stock had fallen from $149 to $14.

In 1975 Land turned the presidency of Polaroid over to Bill McCune, a senior vice-president who had been with the company since 1939 and had worked closely with Land on the development of the first instant camera and film. Manufacture of the SX-70 remained very costly, and numerous design features required modification. Yet Land was satisfied with the camera and wished to pursue research on Polavision, an instant motion picture system. McCune and others, however, favored improving the SX-70. Highly skeptical of Polavision, McCune wanted to base new product lines on market research, rather than following Land’s method of creating a consumer demand for Polaroid’s latest invention. Land introduced Polavision at the 1977 annual meeting, and a limited introduction followed. Although a scientific marvel, the instant films lasted only two and a half minutes and were silent. Videotaping was just hitting the market, and so Polavision was never a consumer success.

Land received his 500th patent and was inducted into the National Inventors Hall of Fame in 1977. Polaroid’s corporate culture began to shift when McCune was voted chief executive officer in 1980. While Land’s entrepreneurial drive had created the company, a more diversified, market-oriented management was needed to continue to propel it. In 1982 Land retired fully, devoting his attention to research at the Rowland Institute for Science, which he had founded in 1965.

In 1976 Polaroid entered a costly and lengthy patent-infringement battle with Eastman Kodak Company. Kodak had been producing the negative component of Polaroid’s black-and-white film since 1944, and its color negative since 1957. With the introduction of the Polaroid SX-70, though, Kodak terminated its partnership with Polaroid, and began its own instant-photography research. In 1976 Kodak introduced the EK-4 and EK-6 instant cameras and PR-10 instant film. Polaroid filed suit within a week, charging 12 patent infringements in camera film and design.

Legal preparations dragged on for five years, until the trial began in October 1981. Ten of the 12 original counts were pressed. After 75 days of testimony and three years of deliberation, U.S. District Court Judge Rya Zobel ruled that seven of the ten Polaroid patents were valid and had been infringed upon. As a result, Kodak’s line of instant-photography products was terminated in 1986. When settlement talks began, Polaroid claimed about $6.1 billion in damages, lost sales, and interest. The case was not settled until 1991 and resulted in a payment by Eastman Kodak of $925 million.

Fended Off Hostile Takeover in Late 1980s

In August 1988 Shamrock Holdings offered to buy Polaroid at $40 a share plus 40 percent of the award from the Kodak settlement. Polaroid’s board of directors rejected the offer, and soon after, the company sold 14 percent of its outstanding shares to an employee stock ownership program (ESOP). Shamrock charged that the ESOP was a form of management entrenchment, and sued. Delaware courts upheld Polaroid’s position, and Shamrock raised its offer to $45 a share. Polaroid’s board again rejected the offer and subsequently announced a $1.1 billion common stock buyback. Shamrock again sued Polaroid in February 1989 for management entrenchment, but Polaroid’s tactics were again upheld. The fight against Shamrock was led by Chairman McCune and I. MacAllister Booth, who had become president in 1983 and CEO in 1985. The pair pruned Polaroid staff in the early 1980s and reorganized the company into three divisions: consumer photography, industrial photography, and magnetic media.

The first success reaped from this new marketing strategy was the Spectra, introduced in 1986. The upscale Spectra came out of market research indicating that instant camera users wanted better picture quality. Again responding to this desire, Polaroid introduced Hybrid IV, an instant film of near 35-millimeter quality, during the early 1990s. Polaroid also introduced a line of conventional film and videotapes starting in 1989. Marketing strategies also continued to become more sophisticated. In 1990 a $60 million advertising campaign emphasized new uses for instant cameras. Suggested uses included recording household items for insurance purposes or keeping a visual record of properties when househunting. In addition, the company cultivated its nonconsumer markets, which contributed at least 40 percent of photographic sales.

While Polaroid’s product lines became more fully guided by market demand, Polaroid continued to be a research-and-development-driven company. By the early 1990s, the company had become the world market leader in instant photography and electronic imaging, and a major world manufacturer and marketer of conventional films, videotapes, and light polarizing filters and lenses. In addition to its instant photography products, Polaroid had by the early 1990s developed a presence in the medical imaging field, with such products as the 1993-released Helios medical laser imaging system, which produced a medical diagnostic image without chemical processing, and the Polaroid EMS Photo Kit, a camera specifically designed for the 35,000 emergency medical team (EMT) squads in the United States. A series of electronic imaging products were also developed for the business segment, including desktop computer film recorders, the Polaroid CI-5000 and CI-3000, and the CS-500Í Digital Photo Scanner. In addition, Polaroid developed the ProCam, an instant camera earmarked for the business customer.

For the nonprofessional or amateur consumer, the long-awaited “Joshua” instant camera was introduced first in Europe in 1992, and then in the United States as “Captiva” in the summer of 1993. Captiva, indistinguishable in appearance from a 35-millimeter camera, took high-quality instant photos that were not ejected in the usual manner, but stored in the rear of the camera, which in turn contained a viewing window enabling the user to see the development of the last exposed frame. Because the photos were smaller than regular-sized 35-millimeter pictures, the camera appealed to those whose lifestyles favored a more compact and instant camera. “HighDefinition” instant film for the amateur photographer came on the market in 1992, further closing the gap in quality between 35-millimeter and instant film.

Troubles Mounted As the 1990s Continued

In the mid-to-late 1990s Polaroid faced an increasingly uncertain future. Overall sales were stagnant—the $2.15 billion figure of 1992 being repeated in 1997, before a more dismal result was announced for 1998: $1.89 billion. Demand for instant film was on the decline, in part because of the rapid growth of one-hour photo shops for conventional film, and the company’s other forays were less than total successes. The Captiva had a very strong debut, but then sales dropped off and Polaroid cut back production. Booth retired in late 1995 and was replaced as chairman and CEO by Gary T. DiCamillo, who had been an executive at the Black & Decker Corporation, where he earned a reputation for cost-cutting, improving productivity, and rapidly developing new products. Soon after taking over, DiCamillo initiated a restructuring at Polaroid, which included a workforce cut of about 15 percent, or 1,570 jobs, and a charge of $247 million for 1995, leading to a net loss of $140.2 million for the year. DiCamillo also overhauled the company’s management team, bringing in additional marketing and product development-oriented leaders from such firms as RJR Nabisco and Kraft Foods.

Further changes came in 1996 when Polaroid largely abandoned its venture into medical imaging, an area in which it had invested about $800 million, when it sold the bulk of its loss-making Helios unit to Sterling Diagnostic Imaging Inc. This sale led in part to a $33 million charge recorded in 1996, a year in which the company reported a net loss of $41.1 million.

The new management team at Polaroid concentrated on rolling out 30 to 40 new products each year, aiming to diversify the company’s offerings. These included a disposable flashlight, alkaline batteries, and a new line of polarized sunglasses. In December 1997, meanwhile, Polaroid announced an additional workforce reduction of 15 percent, or about 1,500 jobs. The company took another restructuring charge of $323.5 million, resulting in a 1997 net loss of $126.7 million. During 1998 Polaroid announced additional job cuts of 600 to 700 employees, took a restructuring charge of $50 million, and posted a net loss of $51 million. The worldwide economic difficulties that began in 1997 proved particularly troublesome for Polaroid, which had long generated a significant portion of its revenue outside the United States. The hardest hit market for Polaroid was Russia, which had been the company’s second largest market in 1995, accounting for $200 million in revenues; for 1998 Polaroid sold only about $25 million worth of goods in that economically troubled nation.

As Polaroid’s red ink continued to flow, speculation about a possible takeover was rife. In addition, while DiCamillo had initially emphasized broadening the company’s product mix when he came on board, he announced in early 1999 that he was considering selling four business units—sunglasses, graphic arts, glare-reducing polarizers, and holography—that had been key components of his diversification efforts. DiCamillo said that he wanted to focus the company on its core instant photography business. The emphasis would also be on the consumer market, with particular attention given to developing youth-oriented instant cameras, such as the I-Zone Instant Pocket Camera, which was a slender camera that produced miniature instant prints. The Pocket Camera had been a great success following its May 1998 debut in the Osaka region of Japan, and would be released in the United States in the summer of 1999. Other products the company was banking its future on included PopShots, the first instant one-time-use camera; and the JoyCam, a smaller, economically priced version of Polaroid’s standard instant camera. The company was also attempting to win the race to develop the first digital camera with an instant print. But the larger question that especially clouded Polaroid’s future was whether instant photography was becoming technologically obsolete.

Principal Subsidiaries

Polaroid A.G. (Switzerland); Polaroid A/S (Denmark); Polaroid Asia Pacific International Inc.; Polaroid Asia Pacific Limited; Polaroid Aktiebolag (Sweden); Polaroid Australia Pty. Limited; Polaroid do Brasil Ltda. (Brazil); Polaroid Canada Inc.; Polaroid Caribbean Corporation; Polaroid Contracting CV (Netherlands); Polaroid Espana, S.A. (Spain); Polaroid Europe Limited (U.K.); Polaroid Far East Limited (Hong Kong); Polaroid Foreign Sales B.V. (Netherlands); Polaroid Foundation; Polaroid Gesellschaft mit beschrankter Haftung (Germany); Polaroid Gesellschaft m.b.H. (Austria); Polaroid India Private Limited; Polaroid International B.V. (Netherlands); Nippon Polaroid Kabushiki Kaisha (Japan); Polaroid Malaysia Limited; Polaroid de Mexico S.A. de C.V.; Polaroid (Norge) A/S (Norway); Polaroid Oy (Finland); Polaroid Singapore Private Limited; Polaroid (U.K.) Limited; Polaroid Memorial Drive LLC; Polaroid Partners, Inc.; Inner City, Inc.; PMC, Inc.; Polint, Inc.; PRD Capital Inc.; PRD Investment Inc.; PRD Management Limited (Bermuda); PRD Overseas Limited (Bermuda); Sub Debt Partners Corp.; Troon, Inc.

Polaroid Corporation

views updated May 23 2018

Polaroid Corporation

I-ZONE/JOYCAM/STICKY FILM TEEN CAMPAIGN
SEE WHAT DEVELOPS CAMPAIGN

1265 Main Street
Waltham, Massachusetts 02451
USA
Telephone: (781) 386-2000
Fax: (781) 386-8588
Web site: www.polaroid.com

I-ZONE/JOYCAM/STICKY FILM TEEN CAMPAIGN

OVERVIEW

Polaroid Corporation, manufacturer of one of the premiere brands of cameras for more than 50 years, faced a crisis in the 1990s as the rise of new technologies, in particular digital cameras, negated the company's edge in the instant delivery of prints. After putting its account in review in 2000, Polaroid selected a new advertising agency, Leo Burnett Worldwide, to help rekindle the brand's sagging fortunes. The focus over the next three years was on taking advantage of the successful launch of the small I-Zone and JoyCam cameras and the small adhesive-backed "sticky film" they used. The company's target was teens, in particular 15- to 17-year-old girls.

Because the marketers were playing to an audience that normally rejected typical hard-sell appeals, they attempted to be innovative and engaging while subtly urging teens in both television spots and print ads to buy the cameras and apply the "sticky pics" to whatever surface struck their fancy. For example, one television spot featured a young woman jumping up and down on her bed, slapping Polaroid pictures on the ceiling. A print effort included an insert of pictures that could be applied as a form of commentary to an accompanying fake advertisement, and teens were encouraged to "hijack" real ads with their own sticky pics.

Over the course of three years Leo Burnett succeeded in many ways. Much of the work received industry awards, and Polaroid enjoyed sales spikes. The added revenue did not, however, stave off bankruptcy for the company, which never approached spending the $150 million the account was worth when Leo Burnett took over. Instead it was estimated that Polaroid, short on cash, spent only about $70 million a year. When the account was again put up for review in 2003, Leo Burnett opted not to participate, leaving the task of rebuilding one of the great brands in American history to others.

HISTORICAL CONTEXT

Polaroid Corporation grew out of the polarization research conducted by Edwin Land beginning in the 1920s. After developing a polarizing material he struggled to find a commercial application, initially finding success with the sale of sunglasses. On Christmas Day 1943, in a flash of inspiration, Land conceived of a camera and self-developing film utilizing his polarizing material. With Polaroid on the verge of financial ruin by 1946, Land placed all his hopes on the development of his instant camera. It was introduced into the market a year later with a great deal of fanfare and was an immediate hit.

During the 1950s the company grew rapidly and became a marketing success story. In the camera industry Polaroid played Pepsi to Kodak's Coca-Cola. Much of Polaroid's success was due to its creative approach to advertising. It was quick to take advantage of the rising popularity of television, enlisting early stars of the medium, like Tonight Show hosts Steve Allen and Jack Paar, to demonstrate Polaroid cameras in live television commercials. According to Stuart Elliott, writing for the New York Times, in the 1970s Polaroid introduced "a series of popular spots featuring James Garner and Mariette Hartley, whose relaxed, playful banter led millions of viewers to think they were married. As recently as the late 1990s, a comic Polaroid campaign carrying the theme 'See what develops' won numerous awards."

The proliferation of one-hour photography developing shops and the increasing popularity of digital photography dramatically changed the landscape for Polaroid during the 1990s. To counteract declining revenues in its core instant film business, Polaroid cut costs while attempting to diversify into such areas as medical imaging (a major failure), flashlights and batteries, and graphic arts. By the end of the decade, however, Polaroid decided to once again turn to the consumer market, this time focusing on a younger demographic market with the I-Zone Instant Pocket Camera, a slim camera producing small instant pictures, and the JoyCam, a smaller, lower-priced version of the company's standard instant camera. Both were introduced in the second half of 1999. Polaroid also looked to expand its business in Europe and the Pacific and as a result dropped its advertising agency, Goodbye, Silverstein & Partners, in favor of Leo Burnett, which had global reach as a part of the Publicis Groupe. After taking over the Polaroid account, at the time worth about $150 million, in the spring of 2000, Leo Burnett launched a marketing campaign to promote the I-Zone and JoyCam following their successful introduction.

TARGET MARKET

While the I-Zone and JoyCam were aimed at the 18-to-25 demographic, the cameras' core users were girls aged 15 to 17, and it was this audience that the ensuing campaign targeted. But it was a tricky population to address, given the marketing savvy possessed by contemporary teens, who from the cradle had been bombarded by advertising. They knew when they were being marketed to and were especially resistant to corporate, hardsell approaches. Polaroid knew its advertising would have to be innovative, witty, and engaging if it were to reach the mark. The goal was to make the I-Zone and JoyCam must-have items for teenage girls. Moreover the marketers wanted to establish I-Zone and JoyCam as enduring brands in the market, rather than mere fads soon to be abandoned by fickle teens. On all levels it was a tall order for Polaroid's marketers.

COMPETITION

Historically Polaroid's strength in the photography field was the instant delivery of photographs. That edge eroded with the emergence of new technologies, however. Conveniently located photo shops and counters in mass retailers offering one-hour development cut into Polaroid's market share, as consumers proved willing to trade off instant development of a single shot for the quick delivery of prints plus the film's negatives in order to make multiple copies of favorite shots. Even more devastating to Polaroid was the introduction of digital photography and its rapid acceptance with mainstream consumers. Not only did digital cameras offer instant gratification, but poor shots could be immediately discarded and favorite ones transferred to home computers, from where they could be printed on ink-jet printers or sent by E-mail to friends and family.

The players in the new digital photography field included old-guard rivals Canon, Olympus, Fuji, Minolta, and Kodak, although the latter, like Polaroid, was not as nimble as the other companies to embrace digital photography. In addition Polaroid had to contend with a new breed of entrants in the field, including corporate giants like Hewlett-Packard, Nokia, and Samsung. What they may have lacked in track record in photography, they made up in large advertising budgets. Their combined marketing heft promoted digital photography, superseding traditional photography at a pace that took the likes of Polaroid and Kodak by surprise. Kodak was much larger and better diversified than Polaroid and had at least been a pioneer in digital photography, holding a number of key patents. It could always change its focus to digital technology, a step the company took in the 2000s. But Polaroid faced a far more serious crisis: how to survive in a marketplace that seemed to have passed it by.

ON SECOND THOUGHT

Polaroid Corporation was established to produce polarizing material, which it initially attempted to sell to automakers for nonglare car headlights and windshields, but Detroit showed no interest. At the 1939 New York World's Fair, Polaroid wowed the public with a three-dimensional film that required special filtering glasses. This time it was Hollywood's turn to pass on Polaroid's innovative technology.

MARKETING STRATEGY

When Leo Burnett launched a marketing campaign in the spring of 2000 to promote the I-Zone and JoyCam to younger consumers, in particular 15- to 17-year-old girls, the objectives were clear but difficult to achieve. The marketers wanted to increase sales of both the cameras and the film they used, but at the same time they hoped to establish the brands and avoid the trap of becoming a passing fancy. The goal wasn't to be on teens' must-have list for just this year but rather for many years to come. The strategy of the campaign was to appeal to the target audience's sense of fun, to encourage them to take pictures with I-Zone and JoyCam cameras and to play with the images. A key feature of the new cameras was their sticky film, which allowed users to apply the small pictures they took to any surface.

Both television spots and print ads in the campaign followed the same game plan. According to Shoot magazine's Fred Cisterna, "the high-energy ads show hip young adults having fun with the new cameras and with the Sticky Film." For example, the television spot titled "Ceiling" opened with the tease of a young woman jumping up and down out of the frame. Next the audience saw that she was jumping on her bed and with each leap was sticking a small Polaroid picture on her bedroom ceiling. In another ad, "Pasties," featuring a teen boy, the audience first saw two photos moving back and forth in time to a techno track of drums and bass. The payoff, as revealed in a widening shot, was that the pictures were stuck to the chest of a young man watching himself in a mirror and moving to the music.

Polaroid attempted to build on the campaign in 2001. The JoyCam was positioned as a social lubricant to consumers in their 20s in an adverting effort themed "It Only Comes Out at Night." Unlike the typical ads selling cameras or film that showed only appealing pictures, this series featured unflattering candid shots of partying young people. Again the marketers hoped to nudge the target audience not only to buy Polaroid's small cameras but to take more pictures, thereby generating increased revenues. In 2001 Polaroid also launched an advertising campaign to promote its core product, introducing a new tagline, "Click, Instantly," which suggested that Polaroid pictures had the ability to bring people together in such a way that they clicked, helping to transform a boring party or mend fences between feuding couples. The company's attempt on the one hand to forge a relationship with teens and on the other to remind an older demographic audience that it still had emotional relevance could not overcome the financial hole Polaroid had slipped into, however. In October 2001 Polaroid filed for Chapter 11 bankruptcy protection. The company had no choice but to continue to spend money to promote its products or risk becoming virtually irrelevant in the marketplace, but because of its debts Polaroid would only be able to budget a fraction of the $150 million global account Leo Burnett thought it had won in 2000.

The campaign to pitch the I-Zone and JoyCam to the teen market continued in 2002. The most innovative work during the year came in the second half when Leo Burnett developed the concept of "hijacking." The inspiration came from copywriter Eric Routenberg, who one day spotted a Polaroid photo stuck on a bumper of a parked car. He told Aaron Baar of Adweek, "That car stopped being a car, and it was an ad for an I-Zone." Out of that experience grew a somewhat subversive, interactive print campaign that the agency hoped would appeal to teens. In several teen magazines Polaroid placed an insert of 32 sticky pics, of a scuba diver, a monkey face, and a man's hairy chest, among others. On the next page was a fake print ad, which the users could comment on by affixing some of the stickers. The goal of these ads was to reengage the core market, to reacquaint people with the I-Zone product and urge them to use their own imagination in finding ways to make a statement using sticky pics—to in essence hijack ads and other images for their own purposes. A more practical objective for Polaroid was to simply increase much-needed sales in the fourth quarter of the year.

WAIT UNTIL THE PRICE COMES DOWN

When Polaroid Corporation introduced the first instant-developing camera in 1947, it was priced at $89.75. The sepia-toned film cost $1.75 for eight exposures.

OUTCOME

The work Leo Burnett did for Polaroid promoting the I-Zone, the JoyCam, and sticky film was successful in a number of ways. When the campaign broke in 2000 Polaroid experienced an immediate jump in sales, and research indicated that the target market liked the products a great deal, suggesting that they would not fade away like many fads. Leo Burnett also received industry recognition for some of the work it did over the course of two years. It received a 2001 Effie Award from the New York American Marketing Association. In 2002 the agency was a finalist for a Magazine Publishers of America Kelly Award and, among other distinctions, received the Best of Show and Award of Excellence in the Chicago Windy Awards, the Art Director's Club of New York 2002 Merit, and Gold and Silver ADDY Awards, given out by the American Advertising Federation. Leo Burnett's hijacking work in 2003 was also an MPA Kelly finalist.

Despite the success of the marketers, Polaroid continued to struggle. In July 2002 the company was bought out of bankruptcy and taken private. Polaroid simply did not have the cash it had once budgeted for advertising. According to press accounts the company was now spending about $70 million a year, less than half of the $150 million the account was estimated to be worth in 2000. When the account was put up for review in 2003, Leo Burnett opted not to participate. Euro RSCG Worldwide then took over the task of reviving the fortunes of one of the truly great brands of the second half of the twentieth century.

SEE WHAT DEVELOPS CAMPAIGN

OVERVIEW

By 1995 Polaroid Corporation was perceived as a brand and a company whose time had passed. Disposable and 35mm cameras were less expensive than instant ones, their film was much cheaper and could be developed in an hour, and they produced better-quality photos. Polaroid sales had been declining steadily over the years, and the brand had largely faded from view. Although the company had no new products to tout, it began attempting to rebuild its brand in the United States through marketing. Polaroid tapped the San Francisco advertising agency Goodby, Silverstein & Partners to craft a campaign that would create positive buzz around the brand while reminding consumers of the unique characteristics of instant photography.

"See What Develops" ran from 1996 through 1998. The campaign leveraged an estimated annual budget of between $30 million and $35 million and included TV as well as print components. The campaign's first series of executions specifically touted the advantages of instant photography, whereas the second installment, unveiled in 1998, focused on human behavior peculiar to the instant-photography experience. For instance, an early TV spot showed a businessman who opened his briefcase to find a surprise photo placed there by his wife as an incitement to come home for lunch, and a later TV spot gently pointed out the absurdity of consumers' insistence on shaking or blowing on Polaroid photos as though to help them develop.

The campaign was well received within the advertising industry, and it initially drove substantial sales increases in Polaroid cameras and film. Polaroid's long-term outlook for recovering its spot atop the U.S. camera industry remained bleak, however, and 1998 saw the company post a 16 percent sales decline versus 1997.

HISTORICAL CONTEXT

On February 21, 1947, Edwin H. Land announced his invention of one-step photography at a meeting of the Optical Society of America. Since that time the Polaroid Corporation, Land's company, had been synonymous with instant photography. There was an explosion of popularity in the 1970s, when instant cameras became simple to use and the shooter did not have to wait weeks for 110 or 35mm film to be developed. By the 1990s, however, instant photography was perceived as a relic of the past, and so was Polaroid.

TARGET MARKET

There was a broad target audience for the "See What Develops" campaign. Polaroid wanted to reach out to current users, lapsed owners, and those who had never owned an instant camera. According to a Goodbye report, this included "men, women, parents, single adults, African Americans, Latinos and Caucasians, people in their 20s and people in their 40s." They also knew that groups such as realtors, contractors, and insurance agents used the cameras in business. Goodbye wanted to influence those users while they were away from their jobs—watching TV at home—to reinforce the need for instant pictures and Polaroid.

COMPETITION

Increased competition from disposable and easy "point-and-shoot" 35mm cameras, along with one-hour film-processing centers, had made Polaroid's instant photography increasingly irrelevant, and the company had lost its positioning in the market over the years. There was no perceived need to take a Polaroid picture when 35mm photography produced images that were cheaper, could be developed quickly, and had better quality.

Since 1990 the company's retail sales had decreased approximately 3 percent a year. The public was not using Polaroids anymore. The cameras were in the backs of closets in many households. Owners used the past tense if they talked about the brand at all. According to Goodby research, people felt like "'it was state-of-the-art twenty years ago … my dad had one … we used to use it all the time for parties … it was so clunky …' And the only advertising they seemed to recall clearly for this 'cultural relic' was the old James Garner and Mariette Hartley campaign from the 1970s."

In addition to the brand's image problem, Polaroid's chief rival, Kodak, planned to buy $108.8 million in advertising time in 1996. Polaroid's ad budget of $33.7 million for the same period was less than a third of Kodak's.

MARKETING STRATEGY

In 1995 Polaroid did not have a new product to release. Goodby, Silverstein & Partners and its client decided that "the advertising would have to bear the responsibility for changing perceptions and attitudes about the Polaroid brand," according to one agency report. They had three objectives—to get people thinking and talking about Polaroid, to make instant photography relevant again and reestablish the uniqueness of Polaroid, and to increase sales of Polaroid cameras and film.

Goodby consumer research indicated high negatives when Polaroid was compared to 35mm cameras and when it was perceived as an ordinary camera for taking pictures for photo albums. Those questioned repeatedly mentioned the poor quality of Polaroid pictures compared to 35mm and that the film was expensive. The ad agency knew it needed to avoid direct comparisons with other cameras. Focus-group participants were given Polaroid cameras and film, and they were asked to bring the pictures they shot to the next meeting. Goodbye wanted to discover how instant cameras could become attractive again to camera buyers. As expected, most of the returned photos were of friends, pets, and family—typical photo album pictures. But the agency discovered in the focus groups that the shots that made the price of a camera and film worth it were the shots that would not be put in albums. For example, one man reported that he had taken a picture to send to his insurance agent of his car's damage from an accident. A woman had used the camera when she was trying on sunglasses to show her husband at home how the glasses looked on her.

The research that drove the creative team was the concept that taking a Polaroid picture was only the first step. Goodbye determined that the photo should be used as "an instant solution to a problem, an instant tool to make something happen. There should always be a purpose, the picture should always set off a chain reaction … something should always happen next." From that concept the "See What Develops" campaign was born.

The agency produced a series of print ads for magazines as diverse as People, Rolling Stone, and Time. Most of the print ads it designed were very simple, consisting of a Polaroid photo, a comment, the Polaroid logo, and the tagline "See What Develops." For instance, one ad featured a photo of the front of a business with a neon sign above it saying MOM. A letter was next to the photo on WOW Productions letterhead, addressed to the Hung-Rite Sign Company. The text simply read "You moron." The picture, the letterhead, and the logo and tagline made the point succinctly. Another print ad featured four shots of a toilet with the seat up. Below each picture was handwritten the day of the week and the time. The text read, "Honey, you always do that. No, I don't. Yes you do. No, I don't. Wanna bet?" followed by the logo and tagline.

NO ACROSS-THE-BOARD INTEGRATION PLAN DEVELOPED

Goodby did not plan an extensive integration effort in the "See What Develops" campaign. There were few direct-mail and in-store promotions. There was, however, a successful seasonal camera promotion that was publicized during the holidays in late 1996 and spring 1997 to encourage buyers of the basic One Step camera to mail in a $10 rebate form. This promotion was tied in with 15- and 30-second TV spots that ran during that time. The "See What Develops" campaign themes also were used by Polaroid's public relations department on the company website and on a promotional van tour.

The media plan included television spots on shows such as NYPD Blue, Seinfeld, Melrose Place, and ER, which were characterized by Goodbye as "hip, high 'talk-value' programming." The aim was to get people talking about Polaroid, to create some "buzz." Because Polaroid had less money to spend than Kodak, the creative team decided to employ a—that is, focus placement entirely in the 6:00 to 9:30 p.m. time slots and run the commercials for a shorter number of weeks than usual to have more impact. The strategy resulted in an average of 133 gross rating points each week for 14 weeks, according to the Competitive Media Report.

Almost $3 million in additional media time was obtained by working with the major TV networks to link upcoming shows with Polaroid and "See What Develops." For instance, a typical program teaser was "See What Develops next week on Melrose Place." Mediaweek honored Polaroid for the best media plan for a campaign spending more than $25 million.

The new television spots, while complicated visually, still conveyed the simple message that sometimes a Polaroid photo was the only thing that would work. "The Architect" was a 30-second spot that featured a group of people in a meeting, heatedly discussing solutions to a crisis. The phone rang, and a man with architectural drawings on his desk indicated to his wife on the line that he was too busy to go home for lunch. She asked him to check his briefcase. The man took out a Polaroid picture and with a delighted and surprised intake of breath, involuntarily said, "Ooohh." He then said he would be home in 10 minutes. A shot of the logo and tagline ended the commercial. The image he saw was left to the viewer's imagination. In "Dog and Cat," another 30-second spot, there were quick shots of a spilled kitchen trash can, a woman scolding a dog as a cat looked on, the dog later watching as the cat approached the trash container, the dog thinking back to the scolding, then picturing his options—a rolling pin, a cleaver, a Polaroid camera. Cut to the logo and tagline. The dog, with a picture in its mouth of the cat in the trash, then greeted the owner at the door, who said, "Oh, dear."

As the campaign matured, Polaroid and Goodby focused on documenting humorous Polaroid-influenced human behavior rather than on explicitly pointing out situations in which instant cameras might be necessary. For instance, in 1998 one documentary-style spot focused on three different adults at a party, each of whom detailed the trademark poses that he or she relied on when instant photos were taken at such events. Another spot poked fun at the unnecessary rituals, such as blowing and shaking the photo, that Polaroid users frequently engaged in as a way of "helping" the image emerge. The season's third TV spot focused on the embarrassment that an otherwise dignified bank manager felt about a Polaroid taken of him at a party.

OUTCOME

Campaign objectives were initially met and exceeded. Three months after the release of "See What Develops," a tracking study showed that there was a "buzz" about Polaroid. Goodbye cited tracking study data when it explained, "unaided brand awareness among ou[r] 18-49-year-old target increased from 31 to 39 percent. Unaided ad awareness rose from 11 percent to 22 percent."

The campaign also got attention from publications besides the advertising press—"something Polaroid's advertising hasn't gotten since the days of the well-liked Garner-Hartley campaign," one Goodbye report stated. The report cited articles in Newsweek, USA Today, Time, and the Los Angeles Times Magazine and added that one of the print ads had been talked about by Tom Snyder on the Late Late Show.

The objective of redefining the relevancy and uniqueness of Polaroid instant photography was also exceeded in the early stages of the campaign. Prelaunch Goodby and Polaroid qualitative research in 1995 and 1996 had found that focus-group members who had negative attitudes about Polaroid before the meeting would leave the session feeling enthusiastic after having viewed the campaign. Goodbye reported that the group members said that "they now wanted to buy a Polaroid camera, how they saw all these new ways of using it, how it could still do things no other camera could do." According to the ad agency, copy tests had revealed that 60 percent of Polaroid owners said that they would buy film after seeing the spots, versus 30 percent for the control group.

The qualitative research done before the campaign began was proven correct. The tracking study determined that consumer intent to purchase a Polaroid camera rose from 9 percent before the campaign to 13 percent three months later. Goodbye explained, "we had given consumers a new way of looking at 'old Polaroid,' and it made them reconsider buying Polaroid cameras and film."

The objective of increasing Polaroid camera and film sales was also met. Partial year A.C. Nielsen data for 1996 indicated that camera sales increased by 13 percent. Film sales, which had been declining 3 percent a year for a long time, increased 1 percent—a turnaround of 4 percent.

In addition to the Mediaweek award, Goodbye and Polaroid received a Silver EFFIE. Polaroid's long-term prospects, however, failed to improve significantly after the campaign's initial effects wore off. "See What Develops" continued to win accolades within the advertising industry, but Polaroid's total sales for 1998 declined 16 percent, dropping to $1.8 billion from a 1997 total of $2.1 billion.

In 1999, although Goodbye had unveiled a new theme, "Right Now," for its Polaroid branding work, the company abruptly pulled that tag, reportedly in response to high-level executives' displeasure about the fact that the same slogan had been used on behalf of a Pepsi product a few years earlier. "See What Develops" was thus resurrected to serve as the tagline for a set of three TV spots that ran in the spring and summer of that year. In the fall of 1999 Polaroid introduced a line of products already popular in Japan and China rather than any that had been developed specifically for the United States, a move that some analysts considered a desperate tactic to spur growth by any means necessary. These products—a pocket-sized camera that produced passport-sized instant photos with adhesive backs and a disposable instant camera—were marketed in the United States as the Polaroid I-Zone line and targeted a previously untapped market of 6- to 17-year-olds. A Goodbye-helmed I-Zone launch campaign resulted in fourth-quarter sales gains of 20 percent, boosting Polaroid's total 1999 sales by 7 percent, to $1.97 billion.

In 2000, however, Polaroid reshuffled its advertising duties to reflect its need for global rather than U.S.-specific marketing platforms, awarding the U.S. account to Chicago's Leo Burnett, an affiliate of Polaroid's European agency Bartle Bogle Hegarty of London and of the Japanese agency Dentsu, which had been simultaneously enlisted to take over the brand's advertising in that country. This reorganization did little to forestall the continued decline of Polaroid's fortunes. Yet another photographic innovation, the digital camera, was becoming increasingly popular among consumers, and its numerous advantages over previous technologies included precisely the capability to offer instant gratification that had been Polaroid's chief marketable advantage over other camera brands. Polaroid filed for Chapter 11 bankruptcy protection on October 12, 2000.

Polaroid Corporation

views updated May 11 2018

Polaroid Corporation

founded: 1932

Contact Information:

headquarters: 549 technology sq.

cambridge, ma 02139 phone: (617)386-2000 fax: (617)386-3924 toll free: (800)343-5000 url: http://www.polaroid.com

OVERVIEW

Polaroid Corporation, the world's leader in the technology of instant imaging, sells more than 5 million cameras each year. Well-known the world over for its cameras that produce photos in seconds, Polaroid also is involved in the production of a wide range of related products including film, photography supplies such as filters and lenses, and professional imaging products. Long a manufacturer of sunglasses, the company in 1998 created a new subsidiary, Polaroid Eyewear, and named Dean Butler, the founder of Lens Crafters, to lead it.

In 1948 Polaroid introduced the world's first instant camera, the Model 95 Land camera, marking a landmark moment in the history of photography. In the late 1990s, having sold nearly 170 million cameras, Polaroid was in the midst of a new revolution, both within the company and in the field of imaging. The company was remaking itself and adapting to the changes made possible by new digital technologies.

Polaroid continued to extend its reach far beyond the borders of the United States, selling its products in hundreds of countries and manufacturing at foreign production facilities in Mexico, the Netherlands, and the United Kingdom. Between 1995 and 1997, the company's sales of cameras rose 15 percent in Europe, while sales of film there climbed 7 percent. Results from Japan were extremely strong during the same two-year period, with camera sales soaring more than 100 percent and film sales rising nearly 40 percent.

COMPANY FINANCES

Polaroid reported a net loss of $127 million on revenue of $2.15 billion in 1997, compared with a loss of $41 million on revenue of $2.28 billion in 1996. In 1995 the company reported a net loss of $140 million on revenue of $2.24 billion, compared with net income of $117 million on revenue of $2.31 billion in 1994.

ANALYSTS' OPINIONS

As 1997 ended, Brian S. Posner, manager of Warburg Pincus Growth & Income Fund and former manager of Fidelity's Equity Income II fund, was extremely bullish on Polaroid, according to Business Week. Posner said he expected the company's new management team, new product introductions in 1998, and strong cash flow position to spark a big upturn.

HISTORY

Edwin H. Land, with the help of George Wheel-wright III, started the Land-Wheelwright Laboratories in 1932 as a result of Edwin Land's development of a synthetic light-polarizing material. Edwin Land believed that science should create inventions and then figure out how to sell them to the public. At first, the laboratory tried applying the material to no-glare automobile headlights and windshields, but during the Depression of the 1930s, they could attract no interest. The company's first break came when Eastman Kodak placed a $10,000 order for polarizing filters, which were later called Polafilters. The material was also used to produce polarized sunglasses by the American Optical Company. During this time, the name "Polaroid" was adopted, and in 1937 the company name was changed to Polaroid Corporation.

Polaroid researchers developed a variety of applications, including lamps, windows, stage lights, and Vectographs, which were three-dimensional photographs. Polaroid continued to push its headlight system on automobile manufacturers, but the only use the automobile industry made of Polaroid products was at the 1939 New York World's Fair where Chrysler displayed a three-dimensional movie of their automobiles.

World War II military contracts were profitable for Polaroid. Working on the Dove heat-seeking missile project was the biggest contract Polaroid had up to that time. Products such as an aircraft elevation device; an infrared device; and goggles, lenses, periscope, and rangefinder color filters were manufactured for the armed forces.

After the war, Polaroid was in trouble. Having been dependent on the war for revenue, the company needed to manufacture products for the consumer now. In 1947, Land introduced instant photography at a meeting of the Optical Society of America. Nine months later the instant camera was sold to the public. The camera sold for $89.75, and eight-exposure film cost $1.75. By 1950, Polaroid cameras were in direct competition with Kodak cameras.

In late 1997, Polaroid took steps to streamline its operation, announcing a $340 million restructuring program designed to help the company better compete in the changing global imaging marketplace. The plan called for writedowns in plant and equipment, as well as the elimination of nearly 2,000 jobs. The restructuring was expected to cut the company's overhead costs to 30 percent of sales; before restructuring costs were 35 percent of sales.

STRATEGY

Edwin Land's strategy at the beginning dictated that scientific research should be the basis of all inventions and that consumer markets should be developed around them. This idea was sometimes an obstacle for the company, though. In its first 15 years, the company developed products without any thought to the consumer. Polaroid tried to sell many early products in which the public was not interested. This led to some rough times for the company. Finally, when the instant camera was developed, Polaroid had found a product the customer really wanted.

In the 1950s, Polaroid used television advertising aggressively. Since an instant photograph took only a minute to develop, the entire process could be demonstrated in a television commercial.

In 1975, Bill McCune was appointed president of Polaroid, but Edwin Land remained a prominent figure in the company. In 1982, Land retired and McCune was able to apply a more market-oriented strategy to the company. In 1983, with McCune as the new chairman and I. MacAllister Booth as president, Polaroid was reorganized into three units: consumer, industrial, and magnetic products. Market research indicated that consumers wanted better quality pictures from their instant cameras, so Polaroid offered the Spectra in 1986. Later, the Hybrid IV was introduced, which yielded pictures near the quality of 35mm film.

Although McCune made Polaroid a more market-driven company, scientific research still remains a large part of the company strategy. Research in the 1990s has been devoted to development of an electronic camera, medical imaging system, a mini-camera, and a printer that applies television images to hard copy.

By 1995, Polaroid sales and camera usage had dwindled. Instant cameras were not as desirable because the market was being bombarded with many inexpensive, 35mm cameras, which now had quicker developing times. Polaroid needed to redefine the significance of instant photography. In 1996, Polaroid sent a focus group out with Polaroid cameras and asked them to use the cameras and record what they used them for. Some were pictures that could be taken by any camera. Others were creative ideas of how to use the Polaroid camera for an instant solution or tool. The "See What Develops" advertising campaign was launched, showing how a Polaroid camera could be used in ways no other camera could.

In December 1997, Polaroid unveiled plans for a $340 million restructuring, including the elimination of 1,800 jobs over 18 months and writedowns in plant and equipment. The company's framework for the restructuring was its vision of a changing market for imaging. CEO Gary DiCamillo, in his March 27, 1998 letter to shareholders, said the company chose to address competitive issues head on, rather than waiting until a reaction was required. He pointed out that the restructuring will reduce Polaroid's total overhead costs from 35 percent to 30 percent of sales, bringing the company "more into line with new competitors in the imaging market."

FAST FACTS: About Polaroid Corporation

Ownership: Polaroid Corporation is a publicly owned company traded on the New York Stock Exchange.

Ticker symbol: PRD

Officers: Gary T. DiCamillo, Chmn. & CEO, 46, $950,000; Judith G. Boynton, Exec. VP & CFO; William J. O'Neill Jr., Exec. VP & Pres., Business Development, 54, $475,000; Carole J. Uhrich, Exec. VP & Pres., Commercial Imaging, 53, $440,000

Employees: 10,000

Principal Subsidiary Companies: Polaroid Corporation's principal subsidiaries include: Inner City Inc.; MagMedia Ltd.; Media Duplication Services Ltd.; Polaroid Eyewear Inc.; Polaroid Caribbean; Polaroid Foundation; Polaroid GmbH (Austria); Polaroid S.A. (Belgium); Polaroid AS (Denmark); Polaroid U.K. Ltd.; Polaroid S.A. (France); Polaroid GmbH (Germany); Polaroid S.p.A. (Italy); Polaroid Neder-land B.V. (Netherlands); Polaroid AB (Sweden); Polaroid AG (Switzerland); Polaroid Australia Pty. Ltd.; Polaroid Far East Ltd. (Hong Kong); Nippon Polaroid K.K. (Japan); Polaroid do Brasil Ltda. (Brazil); Polaroid Canada Inc.; and Polaroid de Mexico S.A. de C.V.

Chief Competitors: Polaroid's competitors include: Acuson; Apple; BASF; Bausch & Lomb; Bayer; Canon; Concord Camera; CPI Corp.; Eastman Kodak; Fuji Photo; GEC; General Electric; Hewlett-Packard; Hitachi; Matsushita; Medtronic; 3M; Minolta; Mitsubishi; Nikon; Philips; Siemens; Sony; and Xerox.

In the late 1990s, as the millenium neared, Polaroid was carefully broadening its strategy to include the rapidly emerging digital technologies. However, the company remained unconvinced that these new technologies would totally replace silver-based photography. Believing that the new and conventional imaging technologies would each have its own market, Polaroid prepared to do more to address the demands of digital imaging customers while continuing to serve the needs of customers using conventional photography.

INFLUENCES

As more of the world opened up, particularly with the dismantling of the Iron Curtain in the early 1990s, Polaroid's sales increased. A major factor behind this sales increase was the higher demand for passport photos.

Polaroid's patent infringement suit against Eastman Kodak was finally settled in 1991 with an award of $873 million to Polaroid. In 1976, Eastman Kodak introduced an instant camera that competed with Polaroid's product line. Polaroid quickly filed a patent infringement suit. In the meantime the company fought back in the marketplace by offering an improved camera. A combination of successful promotion and Kodak's quality problems allowed Polaroid to maintain its standing in the market.

Certainly nothing was more influential in shaping Polaroid's strategy in the 1990s than the emergence of new digital imaging technologies. The new technologies opened up a number of new markets for imaging products, and Polaroid carefully took steps to address these new demands.

CURRENT TRENDS

Digital imaging technology today is the dominant trend. In 1996, Polaroid introduced the PCD-2000 digital camera. The camera is a middle-end model that allows the consumer to take a photo and store it in memory. Polaroid's digital camera is unique in that the memory is fixed in place and not removable like competing cameras, which allows the camera to remain lightweight and inexpensive.

The advent of digital photography has created scores of new uses for images, many of them related to computer-aided preparation of all sorts of documents and the Internet. Polaroid expects the emergence of digital imaging to present a wealth of new opportunities, many of which it has already taken steps to address.

PRODUCTS

Polaroid markets a number of products other than its well-known cameras and film. These products include a wide range of photo accessories, diagnostic imaging film for use by the medical community, fiber laser systems, LCD panels and projectors, polarizing filters and lenses, scanners, computer software for working with images, sunglasses, and videotape.

In 1992, Polaroid marketed cameras for documentation to the construction business and the emergency medical services sector. Bank credit cards with photos were also offered by Polaroid.

CHRONOLOGY: Key Dates for Polaroid Corporation

1932:: The Land-Wheelwright Laboratories is established
1937:: Polaroid is introduced as a brand name and the company becomes Polaroid Corporation
1947:: Land introduces instant photography
1957:: Goes public
1963:: Introduces the first instant color film
1971:: Polaroid ceases selling its products to the South African government
1972:: The first integrated camera and film system is introduced
1976:: Polaroid files a patent infringement suit against Kodak's instant camera
1986:: Kodak is forced to discontinue its line of instant cameras due to patent infringement
1991:: Kodak pays Polaroid $873 million in damages from the lawsuit
1996:: Polaroid launches the "See What Develops" ad campaign
1997:: The company begins a $340-million restructuring

Polaroid has made many technological advances. The Captiva was introduced in 1993 as the first single-lens reflex instant camera. The camera was also offered in Germany as Polaroid Vision. At the Consumer Electronics Show the same year, along with IBM, Polaroid described a system involving digital cameras and portable computers. In 1995, at the DRUPA95 International Printing Fair, Polaroid was able to display three new products, a lithographic printing plate, a direct digital color proofer, and direct digital plates. In 1997, Polaroid produced medical diagnostic imaging media for Sterling Diagnostic Imaging Inc. and continued research and development on medical imaging hardware. The company's Medical Imaging division also enhanced the capability of the 14 x 17 inch laser imaging system, introduced as the Sterling Digital 400.

CORPORATE CITIZENSHIP

Polaroid recognizes its responsibilities to the community. Its Polaroid Foundation, a charitable organization that makes financial grants to nonprofit organizations, supports communities in which the company has a presence by helping the disadvantaged to build measurable skills. The foundation also helps nonprofit organizations through its donations of Polaroid photographic equipment. Employee volunteers help evaluate grant requests received by the foundation. Under the direction of the foundation's professional staff, these volunteers review requests, visit agencies, and make recommendations on how funds should be disbursed.

Polaroid has set up an innovative AIDS education and prevention plan within the company. The plan requires that people receive equal health benefits whether they have AIDS/HIV or not. Since the plan's inception in 1987, the company also has added to the policy, including fairness in other corporate policies, resources, education, support groups, and training. Polaroid is a founding member of the community organization called New England Corporate Consortium for AIDS Education. Polaroid encourages its employees to get involved in AIDS organizations, and the company has instituted an AIDS information office for counseling.

GLOBAL PRESENCE

With a worldwide presence in more than 150 countries, Polaroid is the definition of a global company. About half of the company's total sales come from outside the United States. Worldwide, the company has 35 marketing/manufacturing subsidiaries.

In 1997, the exceptional strength of the U.S. dollar against most world currencies reduced the company's international sales and profits when transactions in those currencies were converted back into dollar terms. Added to 1997 problems on the international scene were sharply reduced sales in Russia and turbulence in a number of Asian countries related to the region's economic crisis.

EMPLOYMENT

Most of Polaroid's employee training is done on the job, and internal technical seminars are held as needed. Polaroid evaluates its employees periodically and prefers to promote from within. In addition, summer internships are offered for students.

MORE THAN JUST INSTANT PHOTOGRAPHS

It was in 1939 that Polaroid showed off its ability to create 3-D movies at the New York World's Fair. As it turned out, the film industry was not especially interested, but the United States military was extremely intrigued. The U.S. Army subsequently used the technology in the training of machine-gun units. Soldiers would operate an anti-aircraft gun against a 3-D simulation of an attacking plane. In addition, reconnaissance planes flew missions in which they took 3-D photographs (called Vectographs) of enemy territory. The relief maps these provided were invaluable to the Allies in planning their offensives, especially the D-Day invasion of Normandy on June 6, 1944.

Polaroid promotes a team spirit. Skill-based pay was introduced in 1990, which gives employees the opportunity to earn more pay by learning new skills. Management works with an employee to redesign and upgrade his or her present position and to introduce new skills. The employee's experience becomes broader as more tasks are learned, which allows for more overlapping of jobs, creating a team environment. Reaching the top of the pay scale is a thing of the past, since an employee's job can continue to be modified. In 1995, Polaroid was honored with a Corporate Conscience Award by the Council on Economic Priorities because of the company's responsiveness to its employees.

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bradstreet information services. the career guide 1997: dun's employment opportunities directory.bethlehem, pa: dun & bradstreet, inc., 1996.

brown hogarty, donna. "new ways to pay." management review, january 1994.

cooke, james aaron. "how polaroid cracked the indian market." traffic management, september 1994.

mirabile, lisa, ed. "polaroid corp." international directory of company histories. chicago: st. james press, 1990.

oldano, rick. "polaroid pcd-2000." macuser, august 1996.

polaroid corp. standard & poor's register of corporations, directors and executives. new york: the mcgraw-hill companies, inc., 1997.

"polaroid corporation." hoover's online, 1998. available at http://www.hoovers.com/premium/profiles/11198.html.

"see what develops—polaroid corp." adweek eastern edition, 5 august 1996.

spiro, leah nathans. "where to invest in 1998: strategies for stocks." business week, 29 december 1997.

will, rosalyn. "corporations with a conscience." business and society review, spring 1995.

For an annual report:

on the internet at: http://www.polaroid.com/polinfo/ann-prt/index.html

For additional industry research:

investigate companies by their standard industrial classification codes, also known as sics. polaroid's primary sic is:

3861 photographic equipment & supplies

Company Profiles for Students

Polaroid Corporation

Polaroid Corporation

Principal Subsidiaries

Further Reading

Polaroid Corporation

Polaroid Corporation

Principal Subsidiaries

Further Reading

Polaroid Corporation

Polaroid Corporation

Beginnings in Polarization Research

Contributed to World War II Effort

1948 Debut of Instant Photography Saved Company

Company Perspectives

SX-70 Debuted in 1972

Fended Off Hostile Takeover in Late 1980s

Troubles Mounted As the 1990s Continued

Principal Subsidiaries

Further Reading

Polaroid Corporation

Polaroid Corporation

I-ZONE/JOYCAM/STICKY FILM TEEN CAMPAIGN

OVERVIEW

HISTORICAL CONTEXT

TARGET MARKET

COMPETITION

ON SECOND THOUGHT

MARKETING STRATEGY

WAIT UNTIL THE PRICE COMES DOWN

OUTCOME

FURTHER READING

SEE WHAT DEVELOPS CAMPAIGN

OVERVIEW

HISTORICAL CONTEXT

TARGET MARKET

COMPETITION

MARKETING STRATEGY

NO ACROSS-THE-BOARD INTEGRATION PLAN DEVELOPED

OUTCOME

FURTHER READING

Polaroid Corporation

Polaroid Corporation

Contact Information:

OVERVIEW

COMPANY FINANCES

ANALYSTS' OPINIONS

HISTORY

STRATEGY

FAST FACTS: About Polaroid Corporation

INFLUENCES

CURRENT TRENDS

PRODUCTS

CHRONOLOGY: Key Dates for Polaroid Corporation

CORPORATE CITIZENSHIP

GLOBAL PRESENCE

EMPLOYMENT

MORE THAN JUST INSTANT PHOTOGRAPHS

SOURCES OF INFORMATION

Bibliography

For an annual report:

For additional industry research:

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Polaroid Corp

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