What Kodak could still learn from Polaroid

By Christopher Bonanos,November 30, 2012
(Page 2 of 4)

Polaroid almost caught that wave, but its shutdown came just a hair too early. In 2004, its managers decided to stockpile a decade’s worth of chemicals and components for instant film and to let the supply lines dry up. Then, went the thinking, it could cash out, selling off the real estate. Over the next few years, as demand slowly began to pick up — from the three groups mentioned above — Polaroid ran out of ingredients well ahead of schedule. There was talk of trying to get the machines rolling again, but the complex chemicals the film required, and its unique self-contained negative, which had been manufactured by Polaroid itself, were simply unavailable.

Or, rather, were unavailable if Polaroid wanted to maintain its familiar retail price of about $10 a pack, and keep up its legacy costs.

In 2009, a group of eccentric entrepreneurs bought Polaroid’s last film factory, in the Netherlands, and incorporated under the name The Impossible Project. Its mission was to restart production without changing the specifications of the film, so it would fit into old Polaroid cameras. Two and a half years after its launch, Impossible has produced several iterations. The first were extremely touchy and unreliable; subsequent batches have been markedly better, though Impossible’s tiny scale has made it difficult to match Polaroid’s level of consistency. Its latest product, introduced in September, is the first one that looks and behaves a lot like Polaroid film did.

Impossible’s scale also means that its product can’t be sold at Polaroid’s price point. A pack containing eight Impossible frames retails for about $24, or $3 per click of the shutter. Yet Impossible sold a million film packs last year. The people who want film will pay extra for it. They’re already paying a huge premium over the essentially zero cost of digital. Film is no longer a commodity product; it’s a preference, required for a labor of love. Boutique prices are going to be part of the future of film, and the devout buyer will adjust.

2 The only cameras are going to be high-end cameras — and very-low-end ones.

Yes, Polaroid and Kodak made hundreds of millions of cameras. But that was never their principal business: The hardware existed mostly to sell film. This is what business-school professors call the razor-and-blade model, pioneered by Gillette: The razor is sold at minimal profit or even given away, and the blades sell for years afterward at a healthy profit margin. Amazon does the same with the Kindle, selling it cheaply to encourage enthusiastic e-book buying.

More than anything else, Polaroid’s desire in the 1990s to keep film sales up and film factories humming was what killed the company. When it should’ve been diving into a variety of digital businesses, Polaroid doubled down on analog-film production, building new production equipment and trying to economize. (“If we get our costs down, we’ll be competitive” was a lot of the thinking; “someone’s going to own instant imaging when the film business inevitably disappears, and it had better be us” was not.)

As it happens, though, the camera business is beginning to see a second radical change. The under-$200 point-and-shoot camera is, in the next few years, mostly going to go away. Already, your smartphone is better at that than a lot of those cameras are; in the next couple of years, those image sensors will only improve. (The iPhone 4 even added an electronic flash and high-dynamic-range capability, both technologies that would’ve seemed impossible to stuff into a phone a decade ago.)

In late August, Nikon announced a hybrid called the Coolpix S800C. The camera looks for all the world like an Android smartphone with a big lens sticking out the back, and will do a lot of the things that a phone could do via Wi-Fi: uploading pictures to Facebook or Instagram, for example. The current owners of the Polaroid trademark — who bought it out of the second bankruptcy, in 2009, and are trying to make a go of things in the digital realm — have shown a similar prototype. It’s not hard to envision the midlevel camera and the smartphone merging into one.

Kodak, to its credit, recognized that the small-camera business is dying. It quit the digital-camera business a few months ago. But one product line continues to work for Kodak: the “one-time use,” or disposable, camera. It solves certain problems that standard cameras do not — like having one on each table at a wedding or photographing in nasty environments where you don’t want to risk an expensive, delicate device. Amazingly, 31 million disposable cameras were sold in 2011.

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