The personal computer is one of the greatest inventions of the 20th century.
While Apple and Microsoft are the kings of the present day personal computer, the innovations
that allowed them to dominate the industry were actually not their own.
Today we’ll explore a story that is as famous as it is misunderstood: how Steve Jobs and
Bill Gates stole from Xerox.
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Toward the end of the 1960s, while Steve Jobs and Bill Gates were still in high school,
Xerox was an industry titan in the copier world.
They had created the first commercially viable copy machine in 1959 and had spent the next
decade establishing a virtual monopoly across America, reaping over half a billion dollars
in sales per year.
However, Xerox’s patents eventually expired, allowing cheaper brands from Japan to challenge
their monopoly.
In the face of this challenge, Xerox management gave their chief scientist, Jack Goldman,
a blank check to develop any new technology that could keep Xerox on top.
Thus, in 1970, Jack created the Palo Alto Research Center, or PARC for short, and set
about assembling the brightest minds in the world of computer science.
One of the researchers at PARC who would later cofound Adobe, said that “The atmosphere
was electric – there was total intellectual freedom.
Almost every idea was up for challenge and got challenged regularly.”
In this innovative environment, the PARC researchers set out to work on groundbreaking computer
technology like the computer mouse, ethernet networking, and (most important to our story)
the graphical user interface, or GUI.
There was only one problem––Xerox management wasn’t interested in any of PARC’s developments.
The company saw no reason to focus on anything else but their incredibly successful line
of copiers.
But PARC didn't give up; instead, they soldiered on and created one product that incorporated
all of their inventions: the Xerox Alto.
It was a computer way ahead of its time; it featured the keyboard and mouse interface
we still use today, while also offering access to email, word processing, and event reminders.
But once again, the Xerox managers in upstate New York didn’t care at all.
They looked at the Alto and saw an overly complicated workstation that would cost $40,000
a piece.
Xerox funded the production of only 2,000 machines and never went ahead with a commercial
release.
The only thing the Xerox managers were interested in were printer and copier innovations, and
while they did eventually get what they wanted, the researchers at PARC were far from happy.
It seemed like all of their breakthroughs had gone to waste.
Many of them left: either to start their own companies or to join the many rising tech
ventures of Silicon Valley.
However, PARC’s contributions weren’t all for nothing.
The research center had made quite the name for itself among techies, and eventually,
Steve Jobs caught wind of what they were doing.
Now, at the time Steve was busy with both the Lisa and Macintosh projects at Apple.
At first he was very skeptical of Xerox and refused to visit PARC himself, but after several
of his employees went there to witness the miracle with their own eyes, he agreed to
join them.
Jobs visited PARC in late 1979, and I’ll let the man himself share how he reacted.
“I had three or four people who kept bugging me that I ought to get my rear over to Xerox
PARC and see what they were doing, and so I finally did, I went over there.
And they were very kind and they showed me what they were working on and they showed
me really three things, but I was so blinded by the first one that I didn't even really
see the other two.
One of the things they showed me was object oriented programming; they showed me that,
but I didn't even see that.
The other one they showed me was really a networked computer system; they had over a
hundred Alto computers all networked, using email, etc. etc.
I didn't even see that.
I was so blinded by the first thing they showed me, which was the graphical user interface.
I thought it was the best thing I'd ever seen in my life.
Now, remember, it was very flawed; what we saw was incomplete; they'd done a bunch of
things wrong, but we didn't know that at the time.
It's still though, they had the germ of the idea was there and they'd done it very well.
And within, you know, ten minutes, it was obvious to me that all computers would work
like this, someday.
It was obvious.”
He knew PARC was onto something great, and he wanted a piece of it for himself.
After the initial meeting, Jobs arranged for his entire programming team to be given full
technical demos.
In exchange, he sold 100,000 shares of Apple to Xerox, and the Xerox management was none
the wiser.
One of the PARC researchers giving the demos, recalled, “After an hour looking at demos,
they understood our technology and what it meant more than any Xerox executive understood
after years of showing it to them.”
Now, at the same time Microsoft was working with Apple as the first third party software
developer for the upcoming Macintosh.
Much like Apple, Microsoft had snatched a lot of former PARC employees, and Bill Gates
was well aware of the Xerox Alto and its innovations.
Steve Jobs knew that, so he made Microsoft sign an agreement as part of their deal in
1981: Microsoft couldn’t release mouse-based software until a year after the Mac’s introduction,
which the contract stated would happen in the fall of 1983.
However, Apple’s lawyers had forgotten to account for the potential of project delays.
And that’s exactly what happened––the Mac’s release date got pushed back, but
the contract date stayed the same.
The Macintosh wouldn’t debut until 1984, while in November 1983 Microsoft made a surprise
announcement at Comdex, the industry's premier trade show.
There, Bill Gates unveiled a graphical user interface environment he called Windows, and
along with it a mouse-based word processor called Microsoft Word.
Steve Jobs was naturally very upset and filed a suit, but eventually the courts cleared
Gates of any wrongdoing.
When Steve confronted Gates and accused him of theft, Gates made a rather famous statement:
“I think it's more like we both had this rich neighbor named Xerox and I broke into
his house to steal the TV set and found out that you had already stolen it.”
Now, the real question is whether we can consider what Bill and Steve did as theft.
This is where internet myth and reality collide, for in fact the Palo Alto Research Center
was pretty open about its inventions.
Unlike what the Steve Jobs biopics show, the Xerox Alto was openly demoed to over 2,000
people in 1975 alone.
Nevertheless, it’s clear that without the contributions of Xerox PARC, many of the technological
advances we take for granted now would not have been possible.
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In fact, as a courtesy to Business Casual viewers, the link in the description of this
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So, click on that link and check Blue Apron out; doing so would not only be great for
you, but you'll also be helping to support Business Casual.
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Anyhow, thanks for watching, and until next time: stay smart.