Xerox's Research Arm Now a Business, Execs Say

Since its establishment in 1970, the Palo Alto Research Center funded by Xerox has developed groundbreaking technologies, including Ethernet, the GUI (graphical user interface) and the computer mouse.

Xerox failed to profit from some of those technologies, ultimately made successful by companies like Apple, which hired researchers from PARC to develop the GUI. Xerox instead made money from PARC projects such as laser printers, which fit the model of a document and imaging company.

PARC was spun off from Xerox in 2002 and now focuses its research on technologies that it can commercialize through its parent or startup companies. The technologies it is researching include self-erasable paper, solid ink and intelligent documents. From 280 researchers during its heyday between the late 1980s and early 1990s, the lab now staffs about 165 researchers, who work with other Xerox researchers worldwide.

IDG News Service sat down with Sophie Vandebroek, Xerox's chief technology officer and Mark Bernstein, PARC's president and center director, to talk about the lab's past inventions and future focus. An edited transcript of that interview follows.

IDG: PARC invented some technologies that it failed to commercialize, like the GUI and mouse. What exactly happened?

Bernstein: The core question people are asking is why didn't PARC turn Xerox into a computer company. You have to look at .... proximal development so Xerox could adopt things that it understood the risk and the value [of]. That clearly wasn't the case for the distributed computing environment that was invented here. [Xerox] ended up creating business to take advantage of that when it created the Star, but by that time the notion of there being a proprietary hardware computing system wasn't going to fly and it was moving off to IBM PC and Microsoft and Apple. [Star is an Information System workstation with a GUI, mouse and Ethernet, introduced in 1981.]

IDG: How did Apple get the GUI? Did you license it to Apple?

Bernstein: They created their version of it. The notion of software patents wasn't very well understood and they hired people who used to work here and they created it.

IDG: Has PARC's business model changed?

Bernstein: It absolutely has. One of the things we've done here by bringing business development people and sticking them in the labs -- they work with the researchers in the lab. Very early on they are testing ... concepts and later on they are trying to align the technology with the right application. What you see, from Xerox's perspective -- their alignment of resources with where their core business is as well as the recognition of where the next generation of service technologies are going to generate value.

Vandebroek: Not only PARC in the past but Xerox in the '90s were launching many products and devices with all of these features that the customer necessarily didn't want at that point in time and didn't definitely want to pay for. ... As a result, in 2000, [Xerox] was losing about US$3.5 million a year, but we made $1.1 billion profit last year. The key element is focus on the customer across the value chain starting with PARC and other research centers.

IDG: What research is Xerox and PARC focused on?

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