The Coming Storm

• Author: Ronald K. Fierstein
• Profession: Lawyer on the team of litigators from the prestigious patent law firm of Fish & Neave
• Pages: 171-204

171

CHAPTER 9

THE COMING STORM

Even though Polaroid experienced some bugs in the SX-70 as 1973 began,

as Bill McCune later explained, the introduction continued because “we

felt it was important to get the product on the market as rapidly as pos-

sible so that we would learn from the customer’s use of it and from the

marketing aspects and customer service.”1 At the Polaroid annual share-

holders meeting on April 24, 1973, Land reluctantly admitted that due to

the slow pace of manufacture, the full national distribution of SX-70 was

still but a goal for the fourth quarter of that year. Yet, with his character-

istic indefatigability, Land’s attitude was, “what’s six months’ delay in

the course of a revolution?”2 Despite the popular consensus that its new

instant photography system was a technological marvel with unlimited

commercial potential, these issues began to have an adverse impact on the

perception of Polaroid in the financial community.

Throughout this period, the costs for working out the persisting issues

continued to build and unavoidably affected Polaroid’s bottom line. At

a presentation for analysts held in October 1973 at the Science Museum

in Cambridge, Massachusetts, that was meant to inspire confidence in

the company, Polaroid executives were forced to admit that the com-

pany’s earnings for the year would fall below previous estimates.3 The

company’s stock fell more than ten percent the next day.4 By the end of

the year, the stock had lost more than fifty percent of its value from the

highs achieved during the initial introduction of SX-70.5 Some of this was

attributable to a generally difficult economic climate that saw the stock

market in decline across the board. But there was no doubt that the sheen

on Polaroid in the Wall Street community, initially created by the dra-

matic launch of SX-70, was wearing off in light of the logistical problems

it had met in bringing its revolutionary product to market.

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A Triumph of Genius

172

Land refused to accept any blame for the falling stock price. When a

journalist suggested that perhaps he had contributed to an inflated valua-

tion of Polaroid immediately following the SX-70 announcement because

of his “ebullience,” Land refused to accept any culpability, suggesting

instead that the analysts had created their own dilemma. “I agree that their

disappointments come from exaggerated expectations. But they’re theirs.”6

In his view, the technical problems the company experienced in getting the

new system to the marketplace were merely to be expected. “Anything we

put out is new enough, different enough, daring enough, that you plan on a

family of technical problems out in the market,” Land insisted.7

Business Week recounted how the SX-70 project represented the full

transition of Polaroid’s manufacturing philosophy. In the early days, Pola-

roid had outsourced as much as possible the manufacture of its products,

particularly its cameras. Now, as Land described it, Polaroid was engaged

in the “high technological drama” of manufacturing almost everything

itself.8 At least publicly, Land asserted that Polaroid was pursuing this

approach “because these cameras and film are technologically unique,

involving new science at each point of manufacture.” A senior Polaroid

executive went even further, according to Business Week, comparing “the

complexity of Polaroid’s project with the Apollo moon shot.”9A report in

Fortune seemed to concur: “However the venture turns out commercially,

the mere production of the SX-70 must already be counted as one of the

most remarkable accomplishments in industrial history.”10

While personally disappointed that Polaroid’s manufacturing facility

was still turning out only 5,000 cameras a day, only half of what he had

hoped for by this time, Land went on to point out that the delays would

eventually end and that the company’s investment to date was sound, in

terms of both the source of the funds and its expected return. The vast

majority of the development capital for SX-70 had been taken from Pola-

roid earnings, and a large portion of the expenditures had created tangible

assets in the form of manufacturing plants that were, as Land character-

ized them, “three times as valuable as when they were created.”11

Ever the optimist, Land remained confident as his team continued to

work through the issues in camera and film manufacturing and brought

more and more SX-70 systems to the market every day. Internally, Pola-

roid predicted sales of six million cameras over the next few years, and

while the media chronicled the company’s problems, the brilliance and

historic nature of SX-70 remained undeniable. Peter Wensberg, a Pola-

roid senior vice president who ran the marketing operation behind SX-70,

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The Coming Storm173

predicted that the company would reach the break-even point on the

SX-70 camera and film system during the first quarter of 1974.12 Indeed,

there was every indication that Polaroid had a successful product that con-

sumers embraced despite its relatively high price. The 461,000 cameras

produced in 1973 had been virtually all snapped up by an eager public by

Christmas. It was clear that demand was exceeding supply.

During this problematic period, some Polaroid executives urged Land

to focus on the introduction of a less expensive camera that would use its

SX-70 film.13 By expanding its product line to the mass consumer, Pola-

roid could broaden the instant photography phenomenon and increase

its profits through the sale of more cameras, as well as from the film

that they would use. It would also beat Kodak to the punch, since it had

always been Kodak’s stated philosophy and intention to direct its prod-

ucts, including its instant photography system, to the average consumer.

But Land had little interest in such a system, preferring the elegance of the

leather-encased, fully automated folding SX-70 camera made of metal,

not plastic.14 Although some development work was conducted at Pola-

roid toward a more economical model, Land did not consider it a priority

at this juncture. The effort received neither his attention nor his enthusi-

asm, and languished accordingly. Analysts and journalists sought answers

from Polaroid executives about why the company had not made this

seemingly obvious move, but they received no response.15 The best Pola-

roid could or would do in terms of the low-end market was to announce

a new camera, The Zip, that would take small black-and-white pictures

using a peel-apart film.16

Despite these internal issues, it was clearly the continued determina-

tion by Kodak to perfect an instant photography system of its own that

posed the long-term danger to Polaroid’s survival. In November 1973,

Kodak chairman Gerald Zornow reassured an analyst’s meeting of his

company’s commitment: “We know where we’re going and we know how

to get there.”17 Zornow also stressed that Kodak’s camera would retail

“for a price the mass market can afford,” a clear knock against SX-70’s

list price of $180. Another camera company, Berkey Photo, had also

announced its intention to introduce an instant camera that would use

Polaroid’s film. But Berkey, as a company and a competitor, did not strike

fear into the heart of the Polaroid community. It was a relatively small

company, founded in the early 1920s by its eponymous leader Ben Ber-

key, and was still run as a family business.18 Only Kodak had the techno-

logical and marketing capability to swamp Polaroid.

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