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This part 2 of the Secret History of Polaroid and Edwin Land. Read part 1 for context.
Kodak and Polaroid, the two most famous camera companies of the 20th century, had a great partnership for 20+ years. Then in an inexplicable turnabout Kodak decided to destroy Polaroid’s business. To this day, every story of why Kodak went to war with Polaroid is wrong.
The real reason can be found in the highly classified world of overhead reconnaissance satellites.
Here’s the real story.
In April 1969 Kodak tore up a 20-year manufacturing partnership with Polaroid. In a surprise to everyone at Polaroid, Kodak declared war. They terminated their agreement to supply Polaroid with negative film for Polacolor – the only color film Polaroid had on the market. Kodak gave Polaroid two years’ notice but immediately raised the film price 10% in the U.S. and 50% internationally. And Kodak publicly announced they were going to make film for Polaroid’s cameras – a knife to the heart for Polaroid as film sales were what made Polaroid profitable. Shortly thereafter, Kodak announced they were also going to make instant cameras in direct competition with Polaroid cameras. In short, they were going after every part of Polaroid’s business.
What happened in April 1969 they caused Kodak to react this way?
And what was the result?
Read the sidebar for a Background on Film and Instant Photography
Today we take for granted that images can be seen and sent instantaneously on all our devices — phone, computers, tablets, etc. But that wasn’t always the case.
Film Photography
It wasn’t until the mid-19th century that it was possible to permanently capture an image. For the next 30 years photography was in the hands of an elite set of professionals. Each photo they took was captured on individual glass plates they coated with chemicals. To make a print, the photographers had to process the plates in more chemicals. Neither the cameras nor processing were within the realm of a consumer. But in 1888 Kodak changed that when they introduced a real disruptive innovation – a camera preloaded with a spool of strippable paper film with 100-exposures that consumers, rather than professional photographers, could use. When the roll was finished, the entire camera was sent back to the Kodak lab in Rochester, NY, where it was reloaded and returned to the customer while the first roll was being processed. But the real revolution happened in 1900 when Kodak introduced the Brownie camera with replaceable film spools. This made photography available to a mass market. You just sent the film to be developed, not the camera.
Up until 1936 consumer cameras captured images in black in white. That year Kodak introduced Kodachrome, the first color film for slides. In 1942, they introduced Kodacolor for prints.
While consumers now had easy-to-use cameras, the time between taking a picture and seeing the picture had a long delay. The film inside the camera needed to be developed and printed. After you clicked the shutter and took the picture, you sent the film to a drop-off point in a store. They sent your film to a large regional photo processing lab that developed the film (using a bath of chemicals), then printed the photos as physical pictures. You would get your pictures back in days or a week. (In the late 1970s, mini-photo processing labs dramatically shortened that process, offering 1-hour photo development.) Meanwhile…
Instant Photography
In 1937 Edwin Land co-founded Polaroid to make an optical filter called polarizers. They were used in photographic filters, glare-free sunglasses, and products that gave the illusion of 3-D. During WWII Polaroid made anti-glare goggles for soldiers and pilots, gun sights, viewfinders, cameras, and other optical devices with polarizing lenses.
In 1948 Polaroid pivoted. They launched what would become synonymous with an “Instant Camera.” In its first instant camera — the Model 95 – the film contained all the necessary chemicals to “instantly” develop a photo. The instant film was made of two parts – a negative sheet that lined up with a positive sheet with the chemicals in between squeezed through a set of rollers. The negative sheet was manufactured by Kodak. Instead of days or weeks, it now took less than 90 seconds to see your picture.
For the next 30 years Polaroid made evolutionary better Instant Cameras. In 1963 Polacolor Instant color film was introduced. In 1973 the Polaroid SX-70 Land Camera was introduced with a new type of instant film that no longer had to be peeled apart.
A Secret Grudge Match
To understand why Kodak tried to put Polaroid out of business you need to know some of most classified secrets of the Cold War.
Project GENETRIX and The U-2 – Balloon and Airplane Reconnaissance over the Soviet Union
During the Cold War with the Soviet Union the U.S. intelligence community was desperate for intelligence. In the early 1950s the U.S. sent unmanned reconnaissance balloons over the Soviet Union.
Next, from 1956-1960 the CIA flew the Lockheed U-2 spy plane over the Soviet Union on 24 missions, taking photos of its military installations. (The U-2 program was kicked off by a 1954 memo from Edwin Land (Polaroid CEO) to the director of the CIA.)
The U-2 cameras used Kodak film, processed in a secret Kodak lab codenamed Bridgehead. In May 1960 a U-2 was shot down inside Soviet territory and the U.S. stopped aircraft overflights of the Soviet Union. But luckily in 1956 the U.S. intelligence community had concluded that the future of gathering intelligence over the Soviet Union would be with spy satellites orbiting in space.
Air Force – SAMOS – 1st Generation Photo Reconnaissance Satellites
By the late 1950s the Department of Defense decided that the future of photo reconnaissance satellites would be via an Air Force program codenamed SAMOS.
The first SAMOS satellites would have a camera that would take pictures and develop them while orbiting earth using special Kodak Bimat film, then scan the negative and transmit the image to a ground station. After multiple rocket failures and realization that the resolution and number of images the satellite could downlink would be woefully inadequate for the type and number of targets (it would take 3 hours to downlink the photos from a single pass), the film read-out SAMOS satellites were canceled.
Sidebar– Kodak Goes to The Moon
CIA’s CORONA – 2nd Generation Photo Reconnaissance Satellites
It was the CIA’s CORONA film-based photo reconnaissance satellites that first succeeded in returning intelligence photos from space. Designed as a rapid cheap hack, it was intended as a stopgap until more capable systems entered service. Fairchild built the first few CORONA cameras, but ultimately Itek became the camera system supplier. CORONA sent the exposed film back to earth in reentry vehicles that were recovered in mid-air. The film was developed by Kodak at their secret Bridgehead lab and sent to intelligence analysts in the CIA’s National Photographic Interpretation Center (NPIC) who examined the film. (While orbiting 94 miles above the earth the cameras achieved 4 ½-foot resolution.) CORONA was kept in service from 1960 to 1972, completing 145 missions.
Film recovery via reentry vehicles would be the standard for the next 16 years.
Sidebar – The CIA versus the National Reconnaissance Office (NRO)
With the CIA’s success with CORONA, and the failure of the Air Force original SAMOS program, the Department of Defense felt the CIA was usurping its role in Reconnaissance. In 1961 it was agreed that all satellite Reconnaissance would be coordinated by a single National Reconnaissance Office (the NRO). For 31 years satellite and spy plane reconnaissance was organized as four separate covert programs:
Program A – Air Force satellite programs: SAMOS, GAMBIT, DORIAN…
Program B – CIA satellite programs: CORONA, HEXAGON, KEENAN…
Program C – Navy satellite programs: GRAB, POPPY …
Program D – CIA/Air Force reconnaissance Aircraft: U-2, A-12/SR-71, ST/POLLY, D-21…
While this setup was rational on paper, the CIA and NRO would have a decades -long political battle over who would specify, design, build and task reconnaissance satellites. The CIA’s outside expert on imaging reconnaissance satellites was… Edwin Land CEO of Polaroid.
The NRO’s existence wasn’t even acknowledged until 1992.
Air Force/NRO – GAMBIT – 3rd Generation Film Photo Reconnaissance Satellites
After the failure of the SAMOS on-orbit scanning system, the newly established National Reconnaissance Office (NRO) regrouped and adopted film recovery via reentry vehicles.
Prodded by the NRO and Air Force, Kodak put in an “unsolicited” proposal for a next-generation imaging satellite codenamed GAMBIT. Kodak cameras on GAMBIT had much better resolution than the Itek cameras on CORONA. In orbit 80 miles up, GAMBIT had high-resolution spotting capability – but in a narrow field of view. This complemented the CORONA broad area imaging. GAMBIT-1 (KH-7) produced images of 2-4 feet in resolution. It flew for 38 missions from July 1963 to June 1967. The follow-on program, GAMBIT-3 (KH-8), provided even sharper images with resolution measured in inches. GAMBiT-3 flew for 54 missions from July 1966 to August 1984. The resolution of GAMBITs photos wouldn’t be surpassed for decades.
CIA – HEXAGON – 4th Generation Film Photo Reconnaissance Satellites
Meanwhile the CIA decided it was going to build the next generation reconnaissance satellite after GAMBIT. Hexagon represented another technological leap forward. Unlike GAMBIT that had a narrow field of view, the CIA proposed a satellite that could photograph a 300-nautical-mile-wide by 16.8-nautical-mile-long area in a single frame. Unlike GAMBIT whose cameras were made by Kodak, HEXAGON’s cameras would be made by Perkin Elmer.
CIA Versus NRO – HEXAGON versus DORIAN
In 1969 the new Nixon administration was looking to cut spending and the intelligence budget was a big target. There were several new, very expensive programs being built: HEXAGON, the CIA’s school bus-sized film satellite; and a military space station: the NRO/Air Force Manned Orbiting Laboratory (MOL) with its DORIAN KH-10 film-based camera (made by Kodak). There was also a proposed high-resolution GAMBIT-follow-on satellite called FROG (Film Read Out GAMBIT) – again with a Kodak Bimat camera and a laser scanner.
In March 1969, President Nixon canceled the CIA’s HEXAGON satellite program in favor of the Manned Orbiting Laboratory (MOL), the Air Force space station with the Kodak DORIAN camera. It looked like Kodak had won and the CIA’s proposal lost.
However, the CIA fought back.
The next month, in April 1969, the Director of the CIA used the recommendation of CIA’s reconnaissance intelligence panel – headed by Edwin Land (Polaroid’s CEO) to get President Nixon to reverse his decision. Land’s panel argued that HEXAGON was essential to monitoring arms control treaties with the Soviet Union. Land said DORIAN would be useless because astronauts on the military space station could only photograph small amounts of territory, missing other things that could be a few miles away. In contrast, HEXAGON covered so much territory that there was simply no place for the Soviet Union to hide any forbidden bombers or missiles.
Land’s reconnaissance panel recommended: 1) canceling the manned part of the NRO/Air Force Manned Orbiting Laboratory (MOL) and 2) using the DORIAN optics in a robotic system (which was ultimately never built) and 3) urging the President to instead start “highest priority” development of a “simple, long-life imaging satellite, using an array of photosensitive elements to convert the image to electrical signals for immediate transmission.” (This would become the KH-11 KEENAN, ending the need for film-based cameras in space.)
The result was:
Over the next two years, Land lobbied against the GAMBIT follow-on called FROG and after a contentious fight effectively killed it in 1971. But most importantly Nixon gave the go-ahead to build the CIA’s KH-11 KEENAN electronic imaging satellite – dooming film-based satellites – and all of Kodak’s satellite business.
Why Did Kodak Go to War With Polaroid?
Finally we can now understand why Kodak was furious at Polaroid. The CEO of Polaroid killed Kodak’s satellite reconnaissance business.
Kodak’s 1970 annual report said, “Government sales dropped precipitously from $248 million in 1969 to $160 million in 1970, a decline of nearly 36 percent.” (That’s ¾’s of a billion dollars in today’s dollars.)
The DORIAN camera on the Manned Orbiting Laboratory and the very high-resolution GAMBIT FROG follow-on were all Kodak camera systems built in Kodak’s K-Program, a highly classified segment of the company. In April 1969 when MOL/DORIAN KH-10 was canceled, Kodak laid off 1,500 people from that division.
Kodak also had 1,400 people in a special facility that developed the film codenamed Bridgehead. With film gone from reconnaissance satellites, only small amounts were needed for U-2 flights. Another 1,000+ people ultimately would be let go.
Louis Eilers had been Kodak president since 1967 and in 1969 became CEO. He had been concerned about Land’s advocacy of the CIA’s programs that shut out Kodak of HEXAGON. But he went ballistic when he learned of the role Edwin Land played in killing the Manned Orbiting Lab (MOL) and the Kodak DORIAN KH-10 camera.
Kodak’s Revenge and Ultimate Loss
In 1963 when Polaroid launched its first color instant film — Polacolor – Kodak manufactured Polacolor’s film negative. By 1969 Polaroid was paying Kodak $50 million a year to manufacture that film. (~$400 million in today’s dollars.) Kodak tore up that manufacturing relationship in 1969 after the MOL/DORIAN cancelation.
Kodak then went further. In 1969 they started two projects: create their own instant cameras to compete with Polaroid and create instant film for Polaroid cameras – Polaroid made their profits on selling film.
In 1976 Kodak came out with two instant cameras — the EK-4 and EK-6 –and instant film that could be used in Polaroid cameras. Polaroid immediately sued, claiming Kodak had infringed on Polaroid patents. 
The lawsuit went on for 9 years. Finally, in 1985 a court ruled that Kodak infringed on Polaroid patents and Kodak was forced to pull their cameras off store shelves and stop making them. Six years later, in 1991, Polaroid was awarded $925 million in damages from Kodak.
Epilogue
1976 was a landmark year for both Kodak and Polaroid. It was the beginning of their 15-year patent battle, but it was also the beginning of the end of film photography from space. That December the first digital imaging satellite, KH-11 KEENAN, went into orbit.
After Land’s forced retirement in 1982, Polaroid never introduced a completely new product again. Everything was a refinement or repackaging of what it had figured out already. By the early ’90s, the alarms were clanging away; bankruptcy came in 2001.
Kodak could never leave its roots in film and missed being a leader in digital photography. It filed for bankruptcy protection in 2012, exited legacy businesses and sold off its patents before re-emerging as a sharply smaller company in 2013.
Today, descendants of the KH-11 KENNEN continue to operate in orbit.
Read all the Secret History posts here
Filed under: Corporate/Gov’t Innovation, National Security, Secret History of Silicon Valley |