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Tue, Oct 14, 2003 - Page 12 News List

Polaroid tries to regain its signature market

AP , WALTHAM, MASSACHUSETTS

Polaroid's place in history has already been secured by its trademark cameras with their signature instant prints.

But bad investments and the digital imaging revolution buried that business, sending the company spiraling into bankruptcy two years ago as it failed to evolve gracefully in a new instant photo world.

Now Polaroid is back, reconstituted and trying to refocus under new ownership by Chicago-based BankOne. And it's betting its future on digital -- on printing kiosks, that is.

"It has to be their future," thinks Ulysses Yannas, an industry analyst at Buckman, Buckman & Reid. "They don't have a choice."

Relieved of large chunks of the old company's debts (including some pension obligations, to the fury of retirees), and slimmed down from its 1978 peak of 21,000 employees to 3,700, Polaroid is actually making money again on its traditional film and camera business.

But that's clearly a dead end.

The percentage of US households using a digital camera will rise from 20 percent last year to 30 percent by the end of this year, according to Infotrends Research Group. That shift inspired Kodak's recently announced plans to slash its dividend and invest US$3 billion in digital research, while companies with no previous connection to photography are flooding the market with new digital camera models.

Polaroid thinks its best bet for a piece of that action is on the digital processing end, but it will have to play catch-up. A dozen rivals, including Kodak and Fujifilm have already claimed much of the best real estate with nearly 50,000 kiosks installed in the US.

But Polaroid says it can beat them with speed and convenience, and even persuade consumers to print more of their pictures instead of just e-mailing them around to friends and family.

Polaroid's kiosks, fed a credit card and camera memory card, spit out a high-quality print every two seconds. That's three times faster than what Kodak, with the largest installed base, plans to roll out next year and ten times faster than the top speed of most competitors.

The new Polaroid kiosks don't offer bells and whistles, such as cropping and enlargements. Polaroid says 85 percent of the digital print market is first-time printing, with most customers wanting merely to pick their best shots and print on 10cm-by-15cm paper -- all in a transaction as easy as getting cash from an ATM.

Polaroid aims to deploy its kiosks in airports, cruise ships, and restaurants popular for children's birthday parties -- anywhere the urge for instant photographic gratification may strike.

The hope is that the higher speed will open up the market for larger orders, like running off photos to send out with the family Christmas card.

"The difference between 2 seconds and 20 seconds is not too big a deal if you're only printing two or three or four prints," said Bob Barton, the director of marketing at Polaroid for the new product line. "But we're finding that a lot of people are doing transactions of 100 prints or more. If you start doing a hundred-print transaction on a 20 or 23-second printer, you're going to be there for a long time."

Polaroid's strategy has chains or other third parties -- shopping malls, for instance -- buying its kiosks and setting their own prices. A trial version operating in Boston's Prudential Center mall, one of about a dozen now deployed, is charging US$0.59 per print.

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