of instant camera users the company increased file sales, its primary margin product. However, the advent of digital photography in the 1990s threatened to erode Polaroid's base of instant film camera users.Demand for Instant Photographic ServicesIn the consumer market, demand for film on newly purchased cameras tended to be highest and then tappered off to somewhat predictable patterns. Therefore film demand often correlated to camera sales. In the commercial market, demand was derived from instant photography for indentification purposes such as I.D. badges, as well as various applications in medicine and law enforcement.The market for instant film photography in the U.S. had matured. Sales in 1994 and 1995 had fallen 2 percent and 12 percent respectively. International sales, on the other hand, offered strong growth potential. With rising standards of living and no infrastructure to process 35 mm film in many emerging market countries, there was a large untapped market for instant photography. Polaroid's cameras were in high demand. Growth in international sales remained steady at 3 to 8 percent per year. Sales from Russia alone accounted for 9 percent of total sales. With these trends in sales growth, the mix of U.S. to international sales had actually reversed itself, making overseas sales the major source of company revenues.Structure of the Instant Photograhpy IndustryThe patents held by Polaroid insulated the company from any major competitive threat domestically. In 1976, the Eastman Kodak Company introduced an instant camera and film product to compete with Polaroid. In response, Polaroid sued Kodak and won $900 million in the largest patent judgement ever awarded. Internationally, Polaroid only faced one other competitor: Fuji. It produced a similar instant film camera that it marketed in Europe and Japan. Yet even in Japan, Polaroid dominated the market.By the 1990s, the instant film camera market was reaching maturity and...
