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Reinventing Xerox PARC As a Money Maker
bonch writes "After a historical reputation for not monetizing breakthrough technologies (including the mouse and desktop GUI), Xerox PARC is now focused on making money from its inventions. CEO Anne Mulcahy vowed in 2001 to return the company to profitability, encouraging 'open innovation' and mandating that research turned a profit. The latest innovation is thin-film printed electronics, intended for a variety of products, from RFID readers to price labels."
In this day and age, I'm shocked that a CEO has been with a company for 10 years!
Opps... Wait. She was succeeded by her long time work associate, when she retired.
Does this mean Xerox has a chance?
Talk about creepy timing.
Jacob Goldman, Founder of Xerox Lab, Dies at 90
In this article they even discuss criticisms of Xerox not commercializing technologies developed at PARC.
Another corporation similar to Rambus which invents stuff and then demands royalties for licenses and patents. Just what we needed for economic growth!
Is it a researcher's job to make a profit? The point of research is to learn something new, whether it works or not. Then its up to the business side to decide what to do with it. Perhaps instead of mandating that PARC must make money, the management should mandate they make smarter decisions on which inventions are marketable or not instead of giving away the mouse and GUI. Hows that 11 year old quest to return to profitability going?
Is 'making money from it's inventions' code for suing people for patent infringement and patenting every dumb little thing possible. Or will they actually being doing something productive?
Dear CEOs of World,
Monetization is a synonym for death by a 1000 cuts, Being used as a way to placate shareholders, it means you have more serious issues going on than just a lack of monetization. Signed,
The World
'We are trying to prove ourselves wrong as quickly as possible, because only in that way can we find progress.' RPF
.... where Xerox marketed the Xerox Alto as the first commercial GUI driven computer in 1973? I'm guessing technology would have advanced to todays levels by the early 90s, MIcrosoft most likely wouldn't exist as the IBM PC would never have been developed, at least not in its initial form, and even Apple would probably have faded away after managing to sell a few "old fashioned" Apple I & 2s in the mid 70s.
But - would the 8bit home computers have existed? If not then the huge 80s influx of hobbyists into programming would never have happened.
So, if you are a salary researcher there, do you get millions of dollars if your invention is the next big thing?
You can either have researchers doing it for fun and the advancement of the technology, or incentivize them to win some monetary award if they do something. But paying a set salary for 30 years of work isn't the right way to do it anymore.
Not at Xerox PARC in Palo Alto, but in Pasadena. He was a fellow Caltech student.
They had a color photocopier under development that printed on paper the size of an unfolded newspaper.
Now of course he wasn't supposed to, but just for grins he photocopied one side of a twenty dollar bill. He showed me both the original and the photocopy. I was completely unable to tell the difference between the two.
Now this was in 1984. How many of you are old enough to recall what photocopiers were like in 1984? I don't think color copiers even existed outside the laboratory.
Xerox could be bigger and richer than Microsoft, Intel and Apple all put together if they had ever gotten products like that into the market.
When was Xerox PARC founded? In the 1960s? And only just now they're thinking they should make a profit with it?
Apple's ATG - Advanced Technology Group - was well-known for just the same kind of nonsense. They were always showing off incredible new products at developer conferences, such as tablet computers with handwriting recognition, but they were reknowned for never actually bringing any of those companies to market.
Contrast this with Bell Labs that among many other valuable, money-making products, invented the Transistor.
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The funding councils that back research at UK universities now require an 'impact' plan; evidence that what is being funded will have a 'positive' impact in terms of society and commercial interest. This was brought in by the previous government, and backed by the current one. At the time most researchers were set against it, pointing out that so many of the inventions and discoveries that have been so beneficial to us all came not from a will to research a specific issue, but from something else, and hence little more than an accident.
I thinks it's troubling that the idea of research for its own sake seems to be dying. In effect we're limiting the overall breadth of investigation, and perhaps that will result in fewer 'useful' discoveries after all.
I remember like it was yesterday when I saw one demonstrated at a computer store. But because I was but a starving student, and the Lisa had a whole megabyte of memory and what for the day was quite a large, bright monochrome graphics display, I knew that I wouldn't have the ten grand to actually buy one any time soon.
The original Macintosh was a largely successful attempt to fix the problem of the Lisa's exhorbitant retail price. The "1984 Superbowl Ad" Macintosh just had 128 kb of RAM and a 512 by 342 monochrome display. The model I eventually bought used had just a single-sided 400 KB floppy and no hard drive.
It was not possible to develop real software on the original Macintosh. Instead developers used cross-compilers with Lisas as the host.
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Wouldn't that be Douglas Engelbart? You know, the Mother of all Demos? You know, when Steve Jobs was 13?
PARC did not invent the mouse. This was done at Stanford And commercialized by SRI. Xerox also did not invent the GUI as one existed in 1964 when the mouse was created.
The idea of an "incumbent" company "transforming" itself into a business concerned with a wholly different technology/product set is hilarious, if we just look at historic evidence.
I would argue that every company has a certain purpose, and if that purpose is going away, the company must go away. There are very small chances a company can transform itself into a new purpose. For example, Krupp was a major maker of steel and machinery such as locomotives. They still are. But they never managed to make some of the most profitable steely machines, namely automobiles, despite having lots of industrial experience and (I assume) lots of capital when Daimler and Benz experimented with internal combustion engines. The same is with IBM - they have a long history of corporate/government data processing and that is where they are still very strong, but they have little clue about personal computing (which MS, Intel, Compaq did for them), search engines or mobile phones.
The same could be said about Exxon, Nestle, Xerox, Daimler, Siemens and other large and old mega-corporations.
And, don't believe their manager's talk about "fostering innovation" and "nurturing creativity" - the reality is that corporations are more often than not befallen by the worst group-think you can imagine. They can only think in the way they have been doing business since they grew big, and that does definitely not help to develop radically new products and business models.
I guess the maximum they can achieve is to venture into a closely related sector, such as HP moving from high-end electronic measurement devices into all sorts of computer hardware and operating systems. I worked at HP and they never had the mindset to transform themselves into a real software company, despite them trying hard.
Xerox will be a copier/printer company as long as paper is being used in business and after that they will be dead as George Washington is now. Let's don't be pathetic and pretend it could be different.
When an organization is focused on providing a corridor to augment human technology it is a service to humanity in the sense that often great and profound things come from these services. As soon as it focuses on making money, and generating revenue, the deeper mission statement is lost, and it becomes just another business concerned about the lowest common denominator to minimize overhead and maximize profit. This is what sucks most of what could be great and interesting about us, and contributes to our deterioration. You have to ignore a great deal of actuality when you buy into smaller realities, like monetary systems.
... in the same way as consoles. Sell the hardware for less than cost price and make up the difference on the software. People are more likely to spend money when they've already made an investment. Its getting them to part with money in the first place thats the hard part.
Every scientist, tinker, chemist, and engineer who "accidently" found something great had an expressed purpose (at least in their own minds) and intention to the experiments/research they were conducting.
For example http://science.discovery.com/brink/top-ten/accidental-inventions/inventions-03.html
" 18-year-old chemist William Perkin wanted to cure malaria; instead his scientific endeavors changed the face of fashion forever and, oh yeah, helped fight cancer. "
While working over Easter break in his home lab on his malaria cure he made his discovery "that aniline could be partly transformed into a crude mixture which when extracted with alcohol produced a substance with an intense purple colour".
Or maybe you prefer the guy who left the lab a mess when he went on vacation.
http://science.discovery.com/brink/top-ten/accidental-inventions/inventions-01.html
For every benefit you receive a tax is levied. - Ralph Waldo Emerson
I don't recall who invented it but I think it was someone at Stanford rather than at Xerox PARC.
I expect that at the time they would have used it to drive glass TTYs. That's not as dumb as you think; one of the original Bell Labs UNIX developers created a purely textual mouse and keyboard driven GUI that was incredibly lightweight compared to today's graphics-heavy desktops.
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Forget all the patent and IP insanity that goes on in the modern world for a minute, and think about what it means for a company to do its own basic research. Companies did R&D because they knew products come and go, and that they would profit handsomely if something their researchers discovered was key to a profitable product. I think that philosophy comes from a time when companies were run for the long term rather than a few quarters into the future. Today, only the big boys can really support their own R&D divisions, such as IBM, Microsoft and GE. HP and Xerox used to have big R&D facilities, and Bell Labs was the biggest of the big, but now the demand to keep shareholders happy outstrips the need to keep the idea pipeline stocked. Today's corporate research is backed by huge piles of money, just as it used to be, simply because you're investing in something that is very capital intensive and doesn't involve a guaranteed payout. Anyone who's taken Corporate Finance 101 knows about the cost-benefit analysis and "which project should we fund given 20 altenatives" exercises the MBAs go through. Add angry shareholders to the mix, most of whom don't care about the company's longevity, and it's no wonder research doesn't get the funds it used to.
One advantage that corporate labs have over university or government labs is their science/engineering focus. It may be basic research, but the reality is that it's mostly in the company's field and ties in neatly with the current or future product lines. I'll use Bell Labs as an example...AT&T used their telephone monopoly, which generated vast sums of money, to fund basic research. That led them to invent the transistor, which (surprise, surprise) was very useful in early telephone switching equipment, and in modern electronics in general. Digital switching dropped the cost of providing phone service, and enabled new technologies that just couldn't exist in the old analog-switched network. Other inventions such as the UNIX operating system and others had wide-ranging implications for technology in general, but at their core they were used to improve the company's products and services.
I think that corporate research is probably going to end up relegated to privately-held firms who make boatloads of predictable income every year, and can afford to fund it. The current stock market just doesn't allow for this to go on...wild gyrations every single day, plus the fact that people and institutions trade in and out of stocks every second, not every 10 years like they used to. That's the thing that's different -- money is still available, but no one wants to plow it into something that doesn't give an immediate payout.
You don't have to monetize everything, you know. It is possible to use one unprofitable department to improve revenues of others. Have a spine and stop worrying about next quarter more than next year.
My manager at Apple had two such plaques on the wall of his office at Apple. The first page of each of his two patents were attractively engraved in bronze then mounted on I think walnut.
I expect he got some manner of bonus, but it was Apple who got the royalties on his contributions towards wireless network encryption.
I'll be damned if I ever sign away the rights to any of my inventions ever again. I've made a whole bunch of merely well-off people spectacularly wealthy, but all I've ever gotten is shafted. That's why I'm self-employed despite the incredible difficulty of it.
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I haven't forgiven Xerox their sin of withdrawing from the mainframe business in July, 1975. They abandoned the Sigma series of machines and some of the coolest system software that ever existed. They will always be losers.
Circle the wagons and fire inward. Entropy increases without bounds.
..takes place in little startups. Think of early HP, Google, Apple, MS, Intel, Adobe. The large corporates aren't really creators of new things. All they do is optimizing their existing portfolio and closely related fields.
It was the result of a long commute.
The compressors we were using made the image files small enough but the decompressors were pathetically slow on the 20 MHz CPUs of the day.
One reason for that is that most compressors are designed to eliminate the redundancies resulting from frequently repeated sequential patterns. Zip, GZip, LZW and so are on great for compressing natural language text, but it's a totally dumbfuck idea to compress two-dimensional graphics with them. I was totally appalled when I learned that PNG used Zip compression.
My whole invention was the result of nothing more than whiling away a long drive home while contemplating what about a picture is the really essential part of making it a picture and not something else.
I'm sorry but I don't have space in the margin of this book to actually explain it. But I do intend to write it up sometime soon rather than leaving it to future generations to figure out. :-)
Sometime after this I asked around for a good tool for losslessly compressing audio files. Everyone responded with clueless answers like "Why don't you just used Zip?" The reason that Zip is a poor audio compressor is that the compression algorithm does not in any way take into account what it is about digitized audio that makes it digitized audio and not something else.
Now we have FLAC and the Apple Lossless Encoder.
A really good way to do purely theoretical research is to have a really long and really boring commute to and from work.
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An idea I've had for a long time is that corporate executives shouldn't be paid based on the quarterly stock price, as is so often the case, but the stock price five years from now.
One way to do that would be to still pay them with options, but they would be contractually forbidden to sell the stock until five years after each vesting.
If they had exercised their options in the meantime, they would still get dividends. That's the way it should be - companies should drive investment by actually earning profits, not through market manipulations that drive up short-term stock prices.
I once worked for a privately-held hedge fund that had a software package that I referred to as "A License To Print Money". While not perfectly accurate, it did a pretty good job of predicting the commodities futures market.
There were just two dozen employees of that company which invested just one very wealthy guy's cash, but even so they traded in ONE THOUDAND different commodities. They got real-time quotes via a high-speed point-to-point wireless link to an ISP in a nearby city, which I imagine was tied into the Internet via either satellite or optical fiber.
That's not what the commodities futures markets are for! That kind of "investment" is not investment at all. It's Just Wrong.
The commodities futures markets were created to provide financing for farmers to grow their crops, for livestock herders to feed their cattle and so on. When one bought a contract for pork bellies, for example, when a pig farmer's pigs were eventually slaughtered, one's meat-packing plant would receive a bunch of refrigerated boxcars full of pork.
The guy I worked for "invested" in pork bellies as well, but to prevent a bunch of pig carcasses from ever showing up on his doorstep, one of my tasks was for my code to perform what is called a "roll", in which it would keep track of the delivery date of the contract, then sell it back on the Chicago market.
I don't know what can be done about the stock market, but perhaps one way to control the wild gyrations in the commodities market would be to forbid participation by parties who have no actual use for the physical commodities.
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.... where Xerox marketed the Xerox Alto as the first commercial GUI driven computer in 1973?
As someone who visited PARC in 1975, and later spent some time programming an Alto, I can say that it wouldn't have been cost effective. PARC's plan, in the early 1970s, was to figure out what the future of computing would be like when the cost of hardware came down. The Alto was built without much regard to cost. The page-sized CRTs were hand-built at PARC itself, and the CPUs were made by Data General for Xerox. They were minicomputers, not microprocessors, basically Data General Novas with a different microcode. An Alto cost upwards of $20,000 to make.
Before PCs, there was a whole industry, led by Wang, in what were called "shared-logic word processors". These were a group of dumb terminals connected to a central unit with a CPU, disk, and printer. Places which did a lot of document revision, like law offices, bought such systems. Xerox came out with the Xerox Star, which was a cross between Alto technology and the dedicated word processor concept, and went into that market, at too high a price point. This was in the late 1970s. IBM introduced the IBM Displaywriter in 1980, with the same monitor that was later used with the IBM PC. Three displays, a printer, and a central control unit cost $26,000.
Getting costs down was a huge problem. The consensus in the industry was that the minimum useful personal computer would be a "3M" machine - one megabyte of memory, one MIPS of CPU power, and one megapixel of display. The Alto was there, but the early PCs, the Apple II, and the original Mac were well below those specs. The Lisa approached the 3M level but cost too much. (The original 64K Macintosh was a miserable flop commercially. Until the 512K Mac and the laser printer, with the specs approaching the "3M" level, did it make money.)
There was another line of development - UNIX workstations of the early 1980s. For about $20K, Apollo, Sun, Three Rivers, IBM and others sold UNIX machines with big screens and enough CPU and RAM power to get something done. They all suffered from appallingly bad GUIs. Then, as now, the UNIX crowd had no clue about user interfaces. For years, Sun workstations mostly had nothing but text windows open. (Plus an analog clock, the most widely used graphic program.) What passed for a GUI tended to be some scheme for front-ending command line programs with a menu system.
If the UNIX industry had had a clue about graphics, the industry might have gone that way when the hardware cost came down.
The usefulness of Unix machines as servers in the datacenter is mostly derived from the command line, as it allows a skilled user to perform some kind of action much more quickly than by using a GUI.
Having said that, there is a different user population who is only low- or moderately skilled in computers and they need a GUI. But the Unix machines came from the "high end" or were servers, so the GUI was never that critical.
Finally, there is a very successuful Unix with a proper GUI, the MacOS X line of computers.
Hi all, This is a great comment thread -- really! A few clarifications:
PARC was not sold off but is an independent subsidiary (incorporated in 2002). This means we work with multiple other clients -- from Fortune 500 companies (including Xerox) to startups to government agencies -- practicing an open innovation model where we provide custom R&D services, technology, expertise, IP, and more.
Our clients commercialize our technology for their markets -- we have never directly commercialized our own tech. But because we work closely with them, and have our own business development embedded inside the company, we get to bring that commercial knowledge in not to mention carry it across different domains (but protected for different "fields of use" for different clients/applications).
Indeed, one huge advantage corporate R&D has over university and government labs is its industry focus. So you know how to turn visions into realities because you know how to work within industry constraints to find solutions. But we also get to use government funding to help jump start the really early stage stuff.
And yes, we are very different from a patent troll! We're also not just contract research. We invest in our own research and development, and we create IP strategically (measured not just by patent number but in portfolio coverage and reduction to practice), and our clients who co-develop with us leverage that IP to reduce their own risk (say, from doing it alone internally) and accelerate their time to market. These aren't just buzzwords: this is make-or-break for a lot of companies!
Not sure there has ever been "pure" research for research's sake... Even since its inception, Xerox PARC had the founding charter to invent the "office of the future" (which it did). And today it's multiple futures: networking of the future (see for example www.parc.com/ccn), cleantech of the future, novel electronics of the future, and so on. But the secret sauce (diverse disciplines, industry focus, etc.) is the same.
If you're interested in learning more on how we resolve the seeming paradox of "business"... "breakthrough" (our tagline today is The Business of Breakthroughs), do check out some of our posts at http://blogs.parc.com/blog/topics/business-of-innovation/ -- we'd love your comments!
~PARC Online
@parcinc
Research Inhumed by Profit
... he photocopied one side of a twenty dollar bill. He showed me both the original and the photocopy. I was completely unable to tell the difference between the two.
The original was the one with printing on both sides.
(I'll get my coat.)
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I do not like Microsoft. Remove them from my email address.
We'd be programming in either Interlisp or Smalltalk-80.
Shai Schticks:"You don't make peace with friends, you make peace with enemies"
I was involved in a project to make PARC products -- the Alto, Ethernet, and laser printer -- into a commercial product in the mid-to-late 70's, at Xerox in El Segundo. The hardware was amazing; I remember the thrill when they wheeled my Alto into my office, pushed aside a ceiling tile, and connected it to a big black cable called the Ethernet. It was quite obviously a minicomputer, not a microprocessor-based personal computer, similar to Digital's PDP-8 and the DG Nova-2 (as Animats said above). I'd used a mouse years before at Englebart's, so it was great to see a manufactured version, but disappointing that it lacked Doug's chord keyboard and three mouse keys for typing ASCII in binary. We knew nothing about the costs of the hardware; we were concerned with the software.
And the software stank. All of the pretty demos running on the Alto were coded at the grad-student level, utterly unusable for a commercial product. For example, the MESA compiler, for the language in which some of the software was written, had been tested only to the extend that it would compile itself. (Most of the Alto s/w was coded in BCPL. Fun facts: the predecessor of C was B; its successor should have been P and the one after that L.) The OIS project to commercialize the Alto blew up to a few hundred people and just as quickly blew away on an early Santa Ana.
I would suggest that Xerox as a company and PARC as a specific part of it failed because they were unable to write commercial-level software.
That's RFID tags and RFID-enabled sensors, not readers.
Your are stating what I was trying to point out above - companies cannot easily transform themselves into providers of radically different products/services. The corporate knowledge of Xerox was centered around copying and manufacturing/servicing/supporting that technology. Their managers had no clue of software development and they were not really willing to acquire that skillset. After all, the paper business was doing well...