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Polaroid Putting Future in Print

The company known for its signature instant photos turns its focus to digital processing with printing kiosks.

October 14, 2003|Justin Pope | Associated Press

WALTHAM, Mass. — 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 protection two years ago after 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 Bank One. And it's betting its future on digital printing kiosks.

"It has to be their future," said 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 making money again on its traditional film and camera business.

But that's clearly a dead end.

The percentage of U.S. households using a digital camera will rise from 20% in 2002 to 30% by the end of this year, according to Infotrends Research Group. That shift inspired Eastman Kodak Co.'s recently announced plans to slash its dividend and invest $3 billion in digital research, while companies with no previous connection to photography are flooding the market with new digital camera models.

Polaroid believes 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 Fuji Photo Film Co., already have claimed much of the best real estate with nearly 50,000 kiosks installed in the U.S.

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 to friends and family.

Polaroid's kiosks, when 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 10 times faster than the top speed of most competitors.

The Polaroid kiosks don't offer bells and whistles, such as cropping and enlargements. Polaroid says 85% of the digital print market is first-time printing, with most customers wanting merely to pick their best shots and print on 4-by-6-inch paper -- all in a transaction as easy as going to 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, such as photos to send out with family Christmas cards.

"The difference between two 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 59 cents per print.

The technology, dubbed Opal and Onyx, will eventually appear in home printers, though no timetable has been set.

The decision to start with retail appears curious. Four out of five digital camera users say they print at home, according to Infotrends, while only 12% use retail locations (leaving off their memory chips for pickup later, or printing themselves at a kiosk). The percentage using online services also is 12%.

But the percentage of people printing at home fell this year, whereas the 12% using retail locations is quadruple the 2002 figure, according to Infotrends.

That may be because the early digital camera buyers were techies who enjoyed fiddling around on their computers. Newer, less-savvy users may prefer to do their printing while doing other shopping instead of going online and using such services as Kodak's Ofoto.

"Now digital cameras are going more and more mainstream," said Kerry Flatley, an analyst at Infotrends. "You're finding, to use a stereotype, a mother who's really busy and really doesn't want to print her own photos at home. She just wants to get her prints quickly."

David Gordenstein, president and chief executive of Zeff Photo in Belmont, Mass., one of the test sites, said it's good to see a strong product coming out of Polaroid, based in nearby Waltham.

"The word 'Polaroid' is synonymous with instant photography," said Gordenstein, who said the kiosk at his store has been a big hit. "They kind of lost touch for a while. Now, with this machine, they're getting back on track."

But although analysts say they're impressed with Polaroid's new technology, that's no guarantee it will rejuvenate the company.

"Competitors already have the positions at retail outlets, so how do you get them out of there?" Yannas said.

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