Everyone in Silicon Valley knows the story of Xerox inventing the modern personal computer in the 1970s and then failing to commercialize it effectively. Yet one of Silicon Valley's most successful companies, Google's Alphabet, appears to be repeating Xerox's mistake with its self-driving car program.
Xerox launched its Palo Alto Research Center (PARC) in 1970. By 1975, its researchers had invented a personal computer with a graphical user interface that was almost a decade ahead of its time. Unfortunately, the commercial version of this technology wasn't released until 1981 and proved to be an expensive flop. Two much younger companies—Apple and Microsoft—co-opted many of Xerox's ideas and wound up dominating the industry.
Google's self-driving car program, created in 2009, appears to be on a similar trajectory. By October 2015, Google was confident enough in its technology to put a blind man into one of its cars for a solo ride in Austin, Texas.
But much like Xerox 40 years earlier, Google has struggled to bring its technology to market. The project was rechristened Waymo in 2016, and Waymo was supposed to launch a commercial driverless service by the end of 2018. But the service Waymo launched in December was not driverless and barely commercial. It had a safety driver in every vehicle, and it has only been made available to a few hundred customers.
Today, a number of self-driving startups are aiming to do to Waymo what Apple did to Xerox years ago. Nuro is a driverless delivery startup that announced Monday that it raised $940 million in venture capital. Another, called Voyage, is testing a self-driving taxi service in one of the nation's largest retirement communities.
Right now, these companies' self-driving services aren't as sophisticated as Waymo's. Their vehicles have top speeds of 25 miles per hour. But Apple started out making under-powered products, too, then it gradually worked its way up-market, ultimately eclipsing Xerox. If Waymo isn't strategic, companies like Nuro and Voyage could do the same thing to the pioneering self-driving company.
Google founder—now Alphabet CEO—Larry Page, of course, knows all about Xerox's mistakes and is determined to avoid repeating them. "They weren't focused on commercialization," Page said of Xerox in a 2013 interview with Wired. According to The Information's Amir Efrati, Page has been pushing for Waymo to commercialize since at least 2016.
But Page may be drawing the wrong lesson from the Xerox experience. Xerox did try to commercialize its technology. It just didn't have a good strategy for doing so. And it's not clear that Waymo does either.
Xerox squandered a massive technology lead
Early computers were too expensive to be dedicated to a single user. But in the early 1970s, Xerox researchers realized that steadily falling costs would soon make personal computing economically viable. Xerox's deep pockets freed the researchers to temporarily ignore economic constraints and explore how these computers of the future might work.
By 1975, PARC had produced a futuristic personal computer called the Alto. It had a bitmapped display, a mouse, and a graphical user interface. Xerox researchers developed a word processor with a what-you-see-is-what-you-get interface. Now-standard operations like "cut," "paste," and "undo" were pioneered by PARC researchers, and the Alto had powerful networking capabilities.
Also in 1975, Xerox created a new Systems Development Division to commercialize PARC's computer technology. The team drew up plans for a sophisticated Office Information Systems Architecture. Every worker would have an Alto-style workstation with support for word processing, email, and other office applications. A fast network would connect the workstations to file and print servers.
This vision became a reality in 1981 with the introduction of the Xerox 8010 office system—known informally as the Star. It was a technological marvel, offering capabilities far beyond those found on other personal computers at the time.
There was just one problem. The workstation started at $16,595—more than $45,000 in 2019 dollars. A practical system needed several workstations as well as file and print servers, which could easily cost hundreds of thousands of dollars. Unsurprisingly, the new system didn't sell well.
Apple took a bottom-up approach
Tom Munnecke/Getty Images
As Xerox engineers were developing the Star, a tiny startup called Apple was building much less impressive personal computers. Apple released its first product, a $666.66 kit computer called the Apple I, in 1976. The Apple II, released the next year, came pre-assembled and sold for $1,298 ($5,300 in today's money). It was cheap enough that small companies and even individuals could think about buying one.
Many computing professionals dismissed early "microcomputers" like the Apple II as toys, but they weren't completely useless. A key breakthrough came in 1979, when Dan Bricklin released VisiCalc, the first spreadsheet program, on the Apple II. VisiCalc sold hundreds of thousands of copies and helped make the Apple II an attractive choice for business customers.
Also in 1979, Apple signed a pivotal deal with Xerox. It gave Xerox the right to invest $1.05 million in Apple ahead of Apple's hotly anticipated initial public offering. In exchange, Apple got an in-depth look at the technology Xerox had sequestered at PARC. In a now-famous series of meetings, PARC engineers demonstrated the Alto's advanced capabilities to a group of Apple engineers, who took copious notes.
Apple's first computer with a graphical user interface, the Lisa, was released in 1983 for $9,995 ($25,000 in today's dollars). Like the Star, it was a commercial flop. But unlike Xerox, Apple quickly learned from its initial failure. Realizing that the high price was a dealbreaker for customers, Apple introduced the Macintosh in 1984. Its introductory price of $2,495 ($6,000 in today's dollars) was cheap enough to make it a commercial success.