What happened to Xerox?

Xerox is an American corporation selling print and digital document products in 160 countries around the world. The company was founded in 1906 by Joseph C. Wilson and Chester Carlson. Xerox was visited by Steve Jobs in 1979 who gained access to PARC in exchange for Xerox receiving shares in Apple. He then purchased the rights to a Xerox GUI and used it to produce the Apple Macintosh. Xerox myopic focus on its photocopier business, an organization skewed toward sales and marketing, and that might have lost the focus on product slowly lost its market leadership.

Background

Xerox is an American corporation selling print and digital document products in 160 countries around the world. The company was founded in 1906 by Joseph C. Wilson and Chester Carlson.

Carlson invented a process known as xerography in 1938 where photographic copies of documents could be made onto plain paper. As the first company to obtain the commercial rights to xerography in 1947, Xerox photocopiers would become a flagship product for decades 

Xerox also invented the personalized computer based on the idea of mimicking a typical office desk. The Xerox Alto was released in March 1973 and was the first computer to support an operating system based on a graphical user interface. 

History will show that Xerox squandered its first-mover advantage in personal computing. The company practically invented digital communication but failed to realize the full potential of its technology. 

With all of that said, let’s take a look at the Xerox story detailing its missed opportunities.

Collaboration with Steve Jobs

Xerox founded the Palo Alto Research Center (PARC) in 1970. It was here that the Xero Alto was developed alongside innovations such as the laser printer, word-processing machine, and Ethernet networking technology.

In 1979, a young Steve Jobs gained access to the research center with Xero receiving Apple shares in return. Jobs immediately saw the commercial potential of the WIMP (Window, Icon, Menu, and Pointing device) system and later remarked that Xerox had no idea how much commercial potential its products had.

Jobs then incorporate the WIMP system into the Apple Lisa desktop computer and invited several PARC researchers to join his company. 

Xerox Star vs. Apple Macintosh

In 1981, the Xerox Star was released as a successor to the Alto. It was the first computer to incorporate file servers, Ethernet networking, print servers, and e-mail, among other features.

However, it was priced at $16,000 with a full Xerox Star-based office installation costing as much as $100,000. By comparison, an IBM machine of the time retailed for a tenth of the price while a Commodore VIC-20 cost only $300. The Star did little more than automate secretarial work and it would be years before advances in software and hardware technology-enabled Xero’s original vision to be realized.

Apple then purchased the rights to the Alto GUI and incorporated it into the Apple Macintosh. When the Macintosh was released in 1984, it was the first computer with a GUI and mouse that was commercially successful.

Innovation and the core business model

Despite having the expertise and necessary componentry to revolutionize digital computing, Xerox maintained an almost myopic focus on its photocopier business.

Indeed, Xerox executives were commonly referred to as “toner heads” since they could not see any commercial value in the company’s non-printing or photocopying assets. In 1985, then-CEO David Kearns stated that the future of Xerox was in copy machines. This was an odd statement considering the company was decades ahead of its competitors in developing computers.

To some extent, the attitude of Xerox management was not helped by how much money the company was making from copiers and high-end printers. Sales commissions for selling million-dollar laser printers to enterprise clients were much higher than a personal workstation worth just a few thousand dollars.

A lack of a forward-thinking strategy also ensured the company could not bridge the gap between emerging technologies and commercialization. While Xerox remains a multi-billion dollar company today, it does not have the pedigree of innovators like Apple, Alphabet, Amazon, or Microsoft. 

Key takeaways:

  • Xerox is an American corporation selling print and digital document products and services worldwide. The company failed to capitalize on revolutionary research performed at its PARC R&D center. 
  • Xerox was visited by Steve Jobs in 1979 who gained access to PARC in exchange for Xerox receiving shares in Apple. He then purchased the rights to a Xerox GUI and used it to produce the Apple Macintosh.
  • Xerox released the Xerox Star personal computer in 1981 in a rare example of the company selling an innovative product commercially. However, the Star was prohibitively expensive, targeted the wrong market, and was a decade ahead of its time.

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Published by

Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which reached over a million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get The FourWeekMBA Flagship Book "100+ Business Models"