PetaPixel

Razor-Blade Model: Polaroid and Kodak Never Existed to Sell Cameras

Christopher Bonanos, author of Instant: The Story of Polaroid, has authored a lengthy piece for the Washington Post on what Kodak — and whoever buys its film lines — can learn from the fall of Polaroid. The article offers some interesting facts about, and insights into, the film photography industry:

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-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.

The business model Bonanos describes is also known as freebie marketing.

What Kodak could still learn from Polaroid [The Washington Post]


Image credit: razor blade by scottfeldstein


 
 
  • http://www.facebook.com/nathanblaney Nathan Blaney

    That’s pretty much how most printers are marketed – very inexpensive, then they gouge you on the ink/toner prices.

  • eraserhead12

    no wonder they’re dying.

  • CoffeeWithChris

    Nothing wrong with the model. They simply had the wrong idea on what they were selling. They were selling film and they should have been selling photographs.

  • http://www.facebook.com/NormCooper Norm Cooper

    Fujifilm diversified over the last ten years, medical imaging, semiconductor support, etc etc, film is now a legacy and waning business

  • eraserhead12

    nothing wrong with the razor blade model when it comes to say, razor blades.

    doesn’t adapt well to digital photography though, seeing as memory cards aren’t like razor blades. not to mention, they didn’t really stake a claim on the memory card business.

  • http://pireze.org/ icie

    As Nathan mentioned, the model is alive and well with printers.

    But the only reason Polaroid/Kodak failed are because the assets they based their businesses off came under heavy assault from the rise of digital photography and they didn’t (or couldn’t) move fast enough to transition elsewhere.

    There is nothing wrong with the razor blade model. In fact, a number of big names are making huge bucks off it.

    If you look at the digital side of things, Google uses a version of the razor blade model: its core search product is free, but from there it derives revenue from ads and other products made possible by its domination of the search market.

    Zynga is another example: their games as pieces of software which can be played for free, but they make a lot of money from in-game purchases that users (or addicts, depending on how you view it) are motivated to buy, all from using that free piece of software.

  • CoffeeWithChris

    You are still thinking in terms of hard goods. If they were in the business of selling photographs they could then do whatever in order to get photographs in to the possession of people. Canon & Nikon work that model well, (admittedly with a different pricing scheme) as you see people buying new cameras all the time to go with their lenses (razors to go with the handles.)

  • eraserhead12

    of course, the razor blade model requires hard goods when it comes to photography.

    digital photographs are as free and infinite as the memory you have to store them, they have absolutely no correlation with razor blades or print photographs in that sense.

  • eraserhead12

    some digital media devices also seem to operate on this principle, especially Amazon’s kindle–they make virtually no profit on the device itself, but they sell their Prime membership and media through it.

  • http://www.facebook.com/profile.php?id=1660547585 Craig Dickson

    Kodak actually did move into digital early. They had DSLRs on the market as early as 1991 (the original Kodak DCS, built on the frame of the Nikon F3). They just didn’t market them well enough, and I think they also suffered from the public’s perception of Kodak as a company that made great film but mediocre cameras.

    Kodak was so used to products selling themselves that they didn’t really know how to push something new and unfamiliar. Unfortunately they still don’t seem to have figured that out.

  • eraserhead12

    I think there was a post on Petapixel a while back about how they needed to cannibalize their profits to succeed (i.e. promote their digital devices, thereby helping to kill usership of analog).

    lol let’s not even get into all the random failures of polaroid’s digital devices. their POS’s are P-O-S’s, they make $60 tablets and $20 MP3 players. doesn’t matter how much they diversify if no one likes what they sell.

  • Alan Dove

    Exactly. Unlike eraserhead below, I think it’s easy to see business models that focus on selling people their own digital photos. Shutterfly et al. do exactly that, and with just a slight twist it’s also the business Flickr and Instagram are in. If Kodak had really jumped into the online storage, photo sharing and print products businesses as soon as digital arrived, they would’ve had huge advantages: tons of capital, massive brand recognition, decades of relevant experience and staff. Instead they kept focusing on film and made half-assed efforts online. As a result, a pack of newborn competitors devoured them while they slept.