Xerox PARC: Inventing the Future and Letting It Walk Out the Door

The story

In 1970, the Xerox Corporation was rich and confident. It made most of the photocopiers in American offices, and it wanted to be ready for whatever came next. So it opened a research lab in Palo Alto, California, called PARC, and gave its scientists a big assignment: invent the office of the future.

They did. In 1973, PARC introduced a computer called the Alto. Today it would look familiar. It had a screen showing pages the way they would look when printed, little pictures you could point at, overlapping windows, and a mouse to move around. Altos could talk to each other over a network PARC invented called Ethernet, and send documents to another PARC invention, the laser printer. At a time when most computers filled rooms and were run by specialists, this was astonishing.

But the Alto was also expensive. Its introductory price was about $32,000 in 1973, and only around 2,000 were ever made, mostly for use inside Xerox and at universities. Xerox's leaders in Connecticut were focused on copiers, and they never figured out how to turn the Alto into a product ordinary people could afford. When Xerox finally sold a version, the Star, in 1981, a full office setup could cost up to about $100,000. It sold poorly. Laser printing did become a big business for Xerox, so PARC was not a total loss, but the personal computer slipped away.

Meanwhile, a small company called Apple was growing fast. In 1979, Xerox's investment arm made a deal to invest $1 million in Apple for 100,000 shares before Apple went public. As part of the arrangement, Apple's people were allowed to see what PARC was working on. In December 1979, Steve Jobs and a group of Apple engineers visited PARC and watched demonstrations of the Alto. One PARC researcher, Adele Goldberg, objected to showing them so much, but Xerox managers overruled her.

Jobs was thrilled by the graphical screen and the mouse. But he did not simply copy them. PARC's mouse had three buttons, cost about $300 to make, and was fragile. Apple wanted a one-button mouse that cost around $15. Apple's designers spent years working out their own ideas, like the menu bar across the top of the screen and the trash can for deleting files. Apple's Lisa computer came out in 1983 and was too expensive to succeed, but the Macintosh in 1984 brought the windows-and-mouse style to a mass audience. Microsoft's Windows followed, and the rest is history.

Xerox later sued Apple, in 1989, over the look of the Mac screen, but a court threw out its main claims. By then the real lesson was clear. Xerox had the inventors, the money and a head start of several years. What it lacked was the will to bet on something that did not fit its existing business. PARC built a personal computer for experts. Apple set out to build a popular computer for everyone.

For a small business, the lesson is close to home. Good ideas are not enough by themselves. Someone has to ask, who is this for, what will it cost them, and how will we get it into their hands?