The Xerox Thieves: Steve Jobs & Bill Gates
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.
The birth of PARC
Towards 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 technologies 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 the PARC who would later co-found Adobe said, “The atmosphere was electric. There was total intellectual freedom. Almost every idea was up for a challenge and got challenged to 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.
How they invented the first PC
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 apiece. Xerox funded the production of only 2,000 machines and never went ahead with the commercial release. The only thing 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.
Is that a PC?
Now at the time, Steve Jobs was busy with both the Lisa and the Macintosh projects at Apple. At first, he was very skeptical of Xerox and refuse 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 network computer system. They had over a hundred Alto computers, all network using email, et cetera, et cetera. I didn’t even see that.
He proceeded:
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. And still, though, they had the germ of the idea was there and they’d done it very well. And within, you know, 10 minutes, it was obvious to me that all computers would work like this someday. It was obvious.
Steve Jobs and Bill Gates enter the stage
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 Mac, 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.
Legal battle
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. Where, in fact, the Palo Alto Research Center was pretty open about its inventions. Unlike what the Steve Jobs bio pics show, the Xerox Alto was openly demonstrated 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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