Xerox is a company that people who want to sound smart or to sound visionary should be familiar with. In the 1960s, Xerox was a company that seemed to own the future, in a position similar to the position Apple or Nvidia are in today. The Xerox name was synonymous with photocopying. In the days before digital document retrieval, every office had at least one photocopy machine. Xerox was in the enviable position of its trademark being a verb. If I said I was xeroxing, people knew exactly what I was doing. But Xerox famously invented the GUI and got very little for its invention.
How thoroughly Xerox invented modern computing
Xerox invented many of the core principles behind the modern world. The computer mouse, the graphical user interface, laser printer, and Ethernet were all invented at Xerox. The mouse and graphical user interface completely changed the way we interact with a computer. Your phone or your tablet don’t use a mouse, but the idea of being able to point at items on your screen and tap on them to make your device do something is a holdover from the mouse. The graphical user interface made computers orders of magnitude easier to use.
Laser printing revolutionized the output. You could draw these impressive graphics, and then you could print them out at high resolution. Xerox even had a technology for scaling the sizes up and down smoothly, to take full advantage of the high resolution.
Ethernet is the sleeper of the four. We don’t think much about networking anymore, it’s just a given that everything is connected nowadays. But any two things that are connected are probably using Ethernet on some level to do it. Other standards for networking existed like ARCnet and Token Ring. And if Ethernet had never existed, we would use one of those instead. But Ethernet was less expensive and scaled faster and higher than the competing standards.
How to sound visionary when talking about this lost opportunity
Today, when someone wants to sound smart, they may talk about how Xerox invented all of these key concepts and didn’t commercialize any of them. They were stuck on the idea that they were selling photocopying machines while they were inventing the very technologies that undermined their core business. As a result, it is entirely possible that a person graduating college in the year 2025 might not even recognize the name Xerox, when in 1975 it was one of the safest investments in the world.
There are several versions of this story floating around, and the exact details that you believe depend on who your favorite and least favorite technology companies are. But essentially Xerox showed the mouse and the graphical user interface to basically anyone who asked. This included Steve Jobs, Bill Gates, Gary Kildall, and probably also dozens of others. In 1983 to 1985, dozens of implementations of Xerox’s ideas started appearing on small, relatively inexpensive computers. The Apple Macintosh and Microsoft Windows were the two most famous implementations of the idea, but far from the only ones. Xerox received virtually nothing even as Microsoft and Apple became two of the most valuable companies in the world.
How to know a visionary from a charlatan
How could Xerox be so short-sighted? That’s the question to ask if you want to know if you are talking to a visionary or a charlatan. If all they know is that Xerox had three earth-shaking ideas that they didn’t profit from, then I don’t think you’re talking to a visionary. That’s because there is more to the story than Xerox having a bunch of great ideas and just giving them away. I’ll go so far as to say the story of Xerox giving it away is a myth, along the lines of Gary Kildall flying in his airplane instead of talking to IBM.
Xerox did NOT give it away and did NOT fail to commercialize it
There’s a simple reason why Xerox showed all of this great technology to anyone who asked. They were trying to sell it. It’s not like this was all some skunkworks project. To be fair, it started out as a skunkworks project, but that was back in 1972. But Xerox continued to develop and refine it. And then Xerox released a fully realized computer based on all of these ideas April 27, 1981. The Xerox Star was a computer with a modern GUI, a mouse, Ethernet, and capable of operating as a file server or print server.
And when someone shows up wanting to see a product you have for sale, you show it to them.
Now, to be completely fair, Apple did see the technology in 1979, two years before it was introduced. But in return for it, Xerox received the opportunity to invest in Apple. Whether this was a mistake depends on who you ask.
The Xerox Star of 1981
The problem wasn’t that Xerox failed to commercialize it. It’s more that Xerox was ahead of its time and the system was slow and expensive. It wasn’t priced for the home market. This was a business computer and it was priced as such. The base system cost $75,000 and each additional workstation cost $16,000. Before you get too worked up about the price, the base system included a workstation and a server, each with a 17-inch high-resolution display, a hard drive, a laser printer that could print at 12 pages per minute, and software. All of this in early 1981, so this was as cutting edge as you could get. Of course it was expensive.
It’s easy to criticize Xerox for pricing it out of the reach of the home market. But Xerox was used to selling to businesses.
The Xerox Daybreak
Its 1985 successor was much less expensive and it was faster and more usable. At $5,000 it still wasn’t cheap. But Xerox made it more efficient, gave it three times as much memory, an 8 MHz processor, a bigger hard drive, and a choice of displays. But by 1985, the floodgates were open. Atari had entered the market with its bargain priced Atari ST. GUIs for IBM PC compatibles were available, notably VisiCorp’s VisiOn and Digital Research’s GEM. Commodore’s Amiga and Microsoft Windows came out later in 1985. The X Window System for Unix and Unix-like operating systems started development in 1984.
Xerox’s mistake and why they were essentially forced to make it
Xerox’s biggest mistake was that it failed to protect its intellectual property. But there was a reason for that too. In 1975, Xerox had a monopoly on photocopiers. That’s not hyperbole. Its market share approached 100%. It faced antitrust action and as a result had to license its entire patent portfolio. It also meant, as a monopolist, they weren’t playing by the same rules as everyone else. Even the appearance that they were trying to use their position in photocopiers to muscle their way into the computer market could be problematic.
In the 1980s, Xerox was playing under similar rules to post-1998 Microsoft.
The copyright suit with Apple
So when Apple came along and built the Lisa, and later the Macintosh, Xerox had to be careful. Xerox did sue Apple for copyright infringement in 1989, which they lost. Had Xerox sued in 1983 or 1984 the way Apple sued Digital Research over GEM, it may have been more successful. The courts were more lenient by 1989 than they had been in the early 1980s thanks to legal action between Ashton-Tate and Lotus.
But the appearance of one of the 50 largest companies in the world picking a fight with a relative newcomer like Apple likely made Xerox’s lawyers nervous in the early 1980s, especially since neither the Lisa nor Macintosh were setting any sales records at the time and AT&T’s breakup was ongoing.
So it’s not like Xerox rolled over and played dead and just gave all its best ideas away.
The patent alternative
In retrospect, Xerox would have been better off patenting the elements of the GUI and licensing them rather than relying on copyright law. But even though the first software patent was awarded in 1968, there were still limits on what was patentable in the 1980s. And Xerox themselves had been influenced by work that happened at the University of Illinois, a taxpayer-funded public university.
The other problem with the patent approach was the 1975 consent decree. Under that agreement, Xerox had to license its patents. They couldn’t pick and choose like Intel does to keep companies like AMD and VIA from releasing pin-compatible CPUs.
Xerox gets an unfair shake
So when I hear someone say that Xerox invented everything about modern computing and then gave it all away to Apple and Microsoft (bonus points if they mention 3Com and/or Adobe), I tend to think their understanding of what Xerox did and why is a bit superficial. Xerox could have tried harder to protect its inventions. But it’s not exactly clear what would have worked and what wouldn’t have. And the stakes were higher than just losing the GUI. Overstepping its bounds could have resulted in the breakup of the company. In 1985, they ranked #38 on the Fortune 500 list. The last thing a company that size wants to do is break up. Regulators broke up AT&T in 1984 and were eyeing IBM at the time, so Xerox was watching itself.
Losing the GUI seems like a high price to pay to avoid a breakup today, but the management of large companies is paid to think two or three years out, not decades out.
Bill Gates has described the Mac and Windows as Apple breaking into Xerox PARC and stealing the TV and Microsoft coming in after and finding Apple stole it first. That’s a bit of an oversimplification, but not entirely unfair either. Gates learned later, as Microsoft faced its own antitrust action, that monopolies have to play by different rules.
David Farquhar is a computer security professional, entrepreneur, and author. He has written professionally about computers since 1991, so he was writing about retro computers when they were still new. He has been working in IT professionally since 1994 and has specialized in vulnerability management since 2013. He holds Security+ and CISSP certifications. Today he blogs five times a week, mostly about retro computers and retro gaming covering the time period from 1975 to 2000.
They also did very well licensing their laser printing patents.