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 __BODY__.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.
SOURCES OF INFORMATION
Bibliography
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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
Polaroid Corporation
