Why the Company That Invented the Future Couldn't Sell It — Xerox PARC and the Morning of Steve Jobs
This article covers the history of technology at Xerox PARC (established in 1970), so it is an exception to the IF Lab principle of "subjects from over 110 years ago." It is featured here as a significant turning point in the history of technology.
One morning, you show the future your company spent 10 years creating to a young rival entrepreneur in just one hour—this is the story of that event in December 1979, said to have taken place at Xerox's Palo Alto Research Center.
However, this article will not be written with the simple narrative that "Jobs stole PARC's ideas." That would be too shallow. What I really want to look at is a different story.
A company that can invent the future and a company that can turn the future into a product are two different things—this is the story of something that happens regularly in modern organizations as well.
1. What actually happened
In 1970, Xerox established a research laboratory (PARC: Palo Alto Research Center) in Palo Alto, California. At the time, Xerox dominated the global market with its copier business and had the luxury of investing its abundant profits into research on the "office of the future." It is said that top researchers from various fields, including physicists, computer scientists, and psychologists, gathered at PARC.
Led by PARC's first acting director Bob Taylor and researchers Alan Kay, Butler Lampson, and Chuck Thacker, a computer called the Xerox Alto was completed in 1973. The specifications of the Alto were from another world at the time.
Bitmap display (a screen capable of drawing graphics pixel by pixel)
Mouse input
GUI (Graphical User Interface) using icons and windows
WYSIWYG editor (document editing where screen display matches printed results)
Communication between devices via Ethernet
Laser printer output
These are recorded as having been operational as of 1973. At the time, computers in the public sphere were still dominated by punch cards and teletype terminals, and even seeing 'text' appear on a screen was a new era.
Thousands of Altos were manufactured as internal research machines and distributed within PARC and to select universities (such as MIT and CMU). However, they were not sold to the general market. It is said that Xerox headquarters (located in Stamford, Connecticut) lacked a clear strategy for this new field, which threatened to undermine their copier business.
In December 1979, Steve Jobs (then 24) and others from Apple Computer are said to have visited PARC twice. Most historical accounts understand that the premise for this visit was a deal involving the investment arm of Xerox headquarters investing in Apple stock. Guided by Alan Kay and others, Jobs observed a demo of the Alto. He is said to have reflected on this visit years later, stating, 'The moment I saw that, I knew everything about how computers would evolve.'
Apple announced the Lisa in 1981 and the Macintosh in 1984. Both adopted a user interface centered on a GUI, and it is generally recognized that they drew direct inspiration from PARC's Alto. However, it is officially maintained that there was no direct misappropriation of code and that Apple conducted its own independent development.
Xerox itself released a product in 1981 called the Xerox Star (8010 Information System), but the price was high at $16,000 (in currency value at the time), and the market did not respond. The initiative for commercializing the GUI shifted to Apple, and later to Microsoft's Windows. From the late 1980s onward, Xerox was forced to downsize its computer business and refocus on its copier and multifunction printer business.
2. Turning Points
There are multiple turning points in this story.
Xerox headquarters commercializing the Alto in the late 1970s
Xerox refusing Apple's visit in 1979
Releasing the Xerox Star at a significantly lower price than in historical fact
Licensing Alto-related patents to other companies to create a source of royalty income
If the research lab were to choose one this time, it would be the first one. What if Xerox headquarters had commercialized the Alto around 1976–78?—that is the divergence.
3. Assumptions for the IF scenario
We will set modest assumptions.
Commercialize the Alto as a professional workstation around 1977
Price it at around $10,000 in currency of the time (cheaper than the historical Star (1981), but higher than the Apple II (1977))
Primary targets are professional offices such as law firms, publishing houses, and design firms
Development of the market for individual users will be delayed (because Xerox's sales channels at the time were for offices)
Jobs and his team's visit in 1979 will occur as in history, but since it is already known as a commercial product, the sense of Apple's "secret discovery" will be diminished
4. Probability of change
Estimated as low.
Many researchers point out that the organizational culture of Xerox headquarters was structured to prioritize the cash flow of the copier business, and the internal mechanism for commercializing PARC's research results was weak. It is reasonable to read that the distance between headquarters and PARC (East Coast and West Coast), differences in business models, and generational gaps—these factors overlapped, and the decision to commercialize the Alto early was passed over as it was in history. The editorial department's assessment is that the probability of this divergence is low, but not zero.
5. How would the world change?
In the short term (late 1970s to early 1980s), the commercial workstation market might have emerged about five years earlier than it did in actual history. By the early 1980s, Alto-based computers might have lined the offices of law firms, publishing houses, and advertising agencies in the United States. However, given the price range, adoption in general households would likely have remained slow. Apple's GUI-equipped products would probably still have appeared as they did in history. However, the image of "Xerox did it first" would have been stronger, and the narrative of UI innovation in Apple's marketing might have taken a different form.
In the medium term (late 1980s to 1990s), Xerox might have established a solid position as a computer company. In actual history, Xerox failed to fully leverage the legacy of the Alto and returned to being a multifunction printer and document solutions company from the 1990s onward. In this alternative future, they might have been able to maintain both their copier and computer businesses, remaining as one of the "information technology companies" alongside IBM, DEC, Apple, Microsoft, and Sun.
In the long term (2000s and beyond), the geography of Silicon Valley might have been slightly different. In actual history, PARC researchers left for companies like Apple, Adobe, 3Com, and Sun in the 1980s, forming the distributed ecosystem of Silicon Valley. If Xerox had commercialized the Alto, these researchers might have chosen to stay within the company, and as a result, the "cluster of ventures founded by PARC alumni" might not have formed. It is a future where the dispersion and fluidity of Silicon Valley would have taken a slightly more moderate form.
However, another problem might have emerged in the long run. If Xerox had retained its computer business, it is a separate question whether it could have responded to the internet revolution of the late 1990s and the mobile revolution of the 2000s with a corporate culture rooted in the copier business. Xerox might have experienced the same structural problems that IBM struggled with in the 1990s, only sooner.
6. The company that can invent and the company that can commercialize are different things
PARC was looking at the future. However, it was not an organization that could turn the future into a "sellable form." Apple did not invent the future. But it translated the future into a form that could be placed in human hands. This difference determined the leadership of technological history.
If we talk only about the composition of "Jobs adopting other companies' technology," the story becomes too simple. But the real story lies in a slightly colder place. Both Jobs, who visited PARC, and the management at Xerox headquarters were acting rationally from their own perspectives. It is just that the direction of that rationality was different.
Even if researchers create an "impossible future," it is the job of the management headquarters, not the research institute, to convert it into "current products." It is said that the distance between the two is more troublesome in terms of organizational psychology than geography.
(As an aside, when we were discussing in the editorial department, "Of the technologies developed at PARC, which one did Xerox come closest to commercializing?", we agreed on the laser printer. While the Alto's GUI was left to die, the laser printer had high affinity with the copier business and grew into a revenue pillar for Xerox. The observation that even technologies born from the same laboratory have their fates divided by the ease of connection to the core business seems suggestive in the context of modern R&D investment.)
7. A story that happens normally in companies today
Sometimes, companies have "amazing things." But who is going to sell them? Who is going to set the price? Who is going to push them forward even if it means destroying existing businesses? Often, the future just lies dormant within research labs and development departments because those decisions cannot be made.
The story of PARC is not just an old tale from a distant Silicon Valley; it is something that happens regularly in companies today. The moment a new business manager is crushed at a board meeting. The moment an internal venture is quietly shelved due to "competition with the core business." The moment talented individuals realize that "results don't take shape here" and choose to resign. The composition of what happened at PARC in 1979 is essentially the same scene being repeated.
It is easy to blame Xerox headquarters. However, our editorial team believes that it is more honest to use this story by looking at your own organization and asking if you are doing the same thing in different situations.
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