Polaroid recently launched the Cube, a block-like video camera with a magnet that clings to any metal surface. The $100 camera, which records 1080p wide-angle videos, uses microSD cards for storage and can record 90 minutes of video on a single charge. It can also be mounted on other services, like GoPro's (NASDAQ:GPRO) cameras, with various mounting kits.

Polaroid's Cube camera. Source: Polaroid.

The Cube could be a threat to GoPro, which went public in late June. GoPro's stock has surged 58% from its IPO price of $24, but doubts remain about the company's lack of competitive barriers. This isn't the first time Polaroid has wandered into GoPro's backyard. Back in January, Polaroid announced three sports cameras -- the Cube, XS100i ($180), and XS1000i (price TBA) -- all squarely aimed at GoPro's market of outdoor enthusiasts.

Could Polaroid mount a historic comeback by challenging GoPro with cheaper and more appealing devices? Let's take a closer look at the business of action cameras to find out.

The business of 'action' cameras
Research firm IDC estimates that GoPro has a 30.4% market share in total video camera sales, compared to 20.8% for its closest competitor, Sony (NYSE:SONY). In the "action" camera category, GoPro dominates with 47.5% of the market compared to Sony's 6.5%. Polaroid doesn't have a significant market share in either category yet.

Last quarter, GoPro's revenue rose 38% year-over-year to $244.6 million, while its adjusted earnings came in at $11.8 million, up from a loss of $3.2 million in the prior year quarter. While that was a promising start for the company, its biggest weakness is that competitors can easily launch similar wearable and mountable video cameras.

Polaroid's Cube already strikes hard at several of GoPro's weaknesses. Polaroid's Cube and XS100i are cheaper than any of GoPro's HERO3 cameras, which cost between $200 to $400.

The Cube's 90 minutes of recording time is comparable to GoPro's HERO3 cameras, which last between 1.5 hours to 3 hours on a single charge, depending on the model and usage. The Cube's 6-megapixel camera sensor also tops the 5-megapixel camera on GoPro's entry-level White Edition HERO3, which costs $200. To top it all off, the Cube's eye-popping blend of minimalism with retro aesthetic could appeal to a wider audience than GoPro's spartan designs.

GoPro's HERO3. Source: GoPro.

GoPro knows that it's only a matter of time before competitors like Polaroid start chipping away at its market share. That's why it plans to transition to a media company to host clips taken with its cameras. However, that's an expensive, risky move that could easily push the company's bottom line back into the red.

Is this the path to Polaroid's rebirth?
While Polaroid could certainly force GoPro to rethink its pricing and designs, it's unclear if action cameras can help Polaroid become relevant again.

Today's "Polaroid" is a shadow of its former self. The brand rose to fame on instant photos, but it was crushed by the rise of digital photography. After filing for bankruptcy protection in 2001, most of the company's assets were sold to a subsidiary of Bank One then passed along to other companies. Those assets were eventually reorganized into a smaller company, which filed for bankruptcy protection again in 2008. Polaroid's assets were eventually bought by a joint venture of Hilco Consumer Capital and Gordon Brothers Brands, which placed the company into a new holding company known as PLR IP Holdings.

Lady Gaga becomes the face of Polaroid. Source: Flickr.

The "new" Polaroid emerged slimmer and smarter than before. In 2009, it secured a 5-year agreement with Summit Global Group to produce and distribute Polaroid digital still cameras, video cameras, digital photo frames, and PoGo mobile products. In 2010, in a gimmicky but effective move, it "hired" Lady Gaga as its creative director.

It's unclear exactly how much revenue Polaroid generates per year, although the company was interested in an IPO after its annual revenues topped $500 million back in 2010. For now, merging the brand's nostalgia-inducing rainbow with modern digital devices like mountable cameras is certainly a clever way to become relevant again.

The Foolish takeaway
It's encouraging that Polaroid now sells products in a growing industry like action cameras, rather than a dying one like instant film. According to Research and Markets, the global action camera market will grow at a compound annual growth rate of 24% by volume and 16% by value between 2013 and 2018.

That growth rate might not satisfy GoPro's growth-hungry shareholders, but for Polaroid, it's an excellent opportunity to finally be associated with the future instead of the past.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.