- The Washington Times - Monday, October 13, 2003

WALTHAM, Mass. - Polaroid’s place in history already has 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. It is betting its future on digital — on printing kiosks, that is.

“It has to be their future,” says 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 is clearly a dead end.

The percentage of U.S. households using digital cameras has risen from 20 percent in 2002 to a projected 30 percent by the end of this year, Infotrends Research Group says. That shift inspired Kodak’s 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 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, already have claimed much of the best real estate with nearly 50,000 kiosks installed in the United States.

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.

A Polaroid kiosk, fed by a credit card and camera memory card, spits out a high-quality print every two seconds. That is three times faster than what Kodak, with the largest installed base, plans to roll out next year and 10 times faster than the current 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 4-by-6-inch paper — all in a transaction as easy as getting cash from an automated teller machine.

Polaroid aims to deploy its kiosks in airports, cruise ships and restaurants popular for children’s birthday parties — anywhere the urge for instant photo 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 cards.

“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, marketing director 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, eventually will appear in home printers.

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

But the percentage of people printing at home went down this year, while the 12 percent using retail locations is quadruple the 2002 figure, Infotrends says.

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 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 officer of Zeff Photo in Belmont, one of the test sites, said it is good to see a strong new product once again coming out of Polaroid, based in nearby Waltham.

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

Although analysts are impressed with Polaroid’s new technology, that is no guarantee it will rejuvenate the company.

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

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