Yes, Polaroid and Kodak made hundreds of millions of cameras. But that was never their principal business: The hardware existed mostly to sell film. This is what business-school professors call the razor-and-blade model, pioneered by Gillette: The razor is sold at minimal profit or even given away, and the blades sell for years afterward at a healthy profit margin. Amazon does the same with the Kindle, selling it cheaply to encourage enthusiastic e-book buying.
More than anything else, Polaroid’s desire in the 1990s to keep film sales up and film factories humming was what killed the company. When it should’ve been diving into a variety of digital businesses, Polaroid doubled down on analog-film production, building new production equipment and trying to economize. (“If we get our costs down, we’ll be competitive” was a lot of the thinking; “someone’s going to own instant imaging when the film business inevitably disappears, and it had better be us” was not.)
As it happens, though, the camera business is beginning to see a second radical change. The under-$200 point-and-shoot camera is, in the next few years, mostly going to go away. Already, your smartphone is better at that than a lot of those cameras are; in the next couple of years, those image sensors will only improve. (The iPhone 4 even added an electronic flash and high-dynamic-range capability, both technologies that would’ve seemed impossible to stuff into a phone a decade ago.)
In late August, Nikon announced a hybrid called the Coolpix S800C. The camera looks for all the world like an Android smartphone with a big lens sticking out the back, and will do a lot of the things that a phone could do via Wi-Fi: uploading pictures to Facebook or Instagram, for example. The current owners of the Polaroid trademark — who bought it out of the second bankruptcy, in 2009, and are trying to make a go of things in the digital realm — have shown a similar prototype. It’s not hard to envision the midlevel camera and the smartphone merging into one.
Kodak, to its credit, recognized that the small-camera business is dying. It quit the digital-camera business a few months ago. But one product line continues to work for Kodak: the “one-time use,” or disposable, camera. It solves certain problems that standard cameras do not — like having one on each table at a wedding or photographing in nasty environments where you don’t want to risk an expensive, delicate device. Amazingly, 31 million disposable cameras were sold in 2011.