Digital Peirce

Digital Peirce

Polaroid aims at digital market

Polaroid Corp. has seen the future, and it is digital.

After seeing its mainstay business selling instant cameras and film come under assault, Polaroid has been shifting much of its focus to the digital world.

Its latest attempt, printing products code named Opal and Onyx, are scheduled to be rolled out this week. They are likely to feature portable printers that use very little power and will let shutterbugs make high-quality printouts of pictures they’ve taken with increasingly popular digital cameras, according to sources and industry observers.

And with Polaroid coming off a round of more than 900 layoffs and disappointing earnings, the stakes are high.

These guys need more than a home run,” said Charles Ronson, a fixed-income analyst with Native Nations Securities. “It’s time for a pinch-hit grand slam.”

Polaroid has lately suffered a series of financial setbacks. In the first quarter, which ended April 1, it watched revenue plummet 18percent, to $331 million from $402 million in the first quarter last year. The culprit was “retailer inventory reductions and less demand for traditional instant cameras and film,” the company told investors last month.


Losses grew from $1.4 million to $90 million.

The company has spent months prepping Wall Street for the launch of Opal and Onyx, which are set to be unveiled Thursday in New York. Company officials won’t say much about the new lines, except to say that Opal is a color digital printing platform while Onyx is black and white.

They’re really looking for a media that would provide the benefits of instant prints but without all the assembly and costs of instant film,” said one source familiar with Polaroid’s strategy.

The source said that with Opal and Onyx, Polaroid was working to create printers that use very little power, run on batteries, and have applications beyond printing out amateur photographers’ digital vacation photographs.

For example, the source said that with regard to the Onyx black and white printing platform, “the thinking was that it could go with a lot of the handheld devices out there,” such as Palm Pilots.

And as there’s more wireless communications and people start passing pictures around . . . having a quick, easy gray scale image would be something people might want.”

Onyx might also be useful for mundane tasks such as printing out names and addresses from handheld computers, the source said.

Another source familiar with the Polaroid’s plans thought Opal and Onyx might be useful in commercial applications. For example, drug stores might set up kiosks where photographers could make instant prints from their digital cameras.

Polaroid has traditionally made money not by selling cameras, but by selling film. Polaroid pictures can cost a consumer more than $1 each, and more than 60 percent of that is profit for Polaroid, according to calculations by the research firm R.L. Renck & Co. Polaroid also has popular new formats, such as the youth-oriented “iZone,” but those have proven to be less profitable.

And while Polaroid has a line of digital cameras _ sales of which tripled from 1999 to 2000 _ customers only pay for them once, and Polaroid doesn’t see the recurring revenue it enjoys from people who buy film refills for their instant cameras.

With Opal and Onyx, company observers expect Polaroid to make money not so much from the sale of printers, but from what’s known in industry slang as “media” _ basically a type of film that would need to be replaced from time to time.


Although company spokesman Skip Colcord said he couldn’t comment on specifics of Opal and Onyx, the company has described them in regulatory filings as “proprietary digital media platforms.”

Photographers who want to print out digital photos from their computers have a variety of options, but those that might produce a high-quality image can be costly. And Salomon Smith Barney analyst Jonathan Rosenzweig notes that most people who own digital cameras never print their pictures at all.

The question you have to ask yourself is, ‘why aren’t they printing them?”‘ he said. “A lot of the poeple in the industry think it’s that the technology needs to be cheaper and more convenient.”

Earlier this year, Polaroid introduced a portable printer that lets users insert their cameras’ memory cards and then uses traditional Polaroid film to make a picture. But it costs $249, and even Colcord concedes the new Opal and Onyx lines will offer superior technology.

Colcord compares the challenge Polaroid faces from digital photography to that faced by paper manufacturers in decades past, when there was talk that computers would lead to a “paperless office.”

Well, of course we use more paper as a society today than we ever have. We see the same thing happening with digital imaging. We agree it’s growing tremendously, but we don’t agree that it’s going to lead to a film-less age,” he said. “It’s going to give birth to a whole new realm of opportunities.”

>>> View more: A SWING AND A HIT

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