Polaroid invented instant photography. Digital cameras killed it, management missed signs.

Polaroid was one of the great success stories of American innovation. Founded in 1937 by Edwin Land, it invented instant photography in 1948 and dominated the category for decades. At its peak in 1991, Polaroid had $3 billion in annual revenue and employed 21,000 people. The company's instant film was a cash cow with high margins and a loyal customer base.

But the digital camera was the iceberg. Polaroid had actually entered the digital market early — it released the PDC-2000 digital camera in 1996, one of the first on the market. But the company never committed to the new technology. Senior management was trapped by the success of instant film: why invest in a digital business that would cannibalize the profitable core? The PDC-2000 was priced at $4,000, aimed at professionals, and failed to capture significant market share.

By the late 1990s, the decline was accelerating. One-hour film processing, disposable cameras, and the rise of digital photography all eroded Polaroid's market. The company sold its iconic Cambridge headquarters in 2000. On October 11, 2001, Polaroid filed for Chapter 11 bankruptcy protection. The company's assets and brand were sold to One Equity Partners the following year. The original Polaroid Corporation ceased to exist.

Polaroid's failure is a classic case of the 'success trap' — a company that was so focused on its existing profitable business that it could not pivot to the technology that would make it irrelevant. The company had the technology, the talent, and the brand to lead the digital photography revolution. But it could not bring itself to invest in the future at the expense of the present.