Xerox Copies, PARC, and Apple's Steve Jobs

How Xerox Almost Went Bankrupt After a Visit From Steve Jobs!

Feb 5, 2024

Sometimes business owners question whether it’s worth it to actually invest in intellectual property protection. They might wonder, what if their new product flops and they don’t earn back the cost of patenting it? Or what if going into all of that patent protection is just being paranoid? But the truth is that no company is invincible — as proved by Xerox in 2001, when the technology giant almost went bankrupt with over $17 billion in debt. 

How did this happen? It all started in 1979, when Steve Jobs visited Xerox’s Palo Alto Research Center (PARC) to brainstorm some ideas for Apple. And had Xerox been more cautious with their IP, it might have been avoided entirely. 

The Background: Xerox and the PARC

Xerox’s claim to fame came in 1959 when they introduced the world’s first plain paper copier: the Xerox 914. This copier was easy to use and a revolution when it came to office supplies. By the 1960s, Xerox was a major name in office copiers. 

But while Xerox chose to focus on copiers commercially, their team of tech researchers were capable of much more. In 1970, Xerox opened the Palo Alto Research Center, which became responsible for computing inventions such as: 

  • Laser printing
  • Graphical user interface (GUI)
  • WIMP (window, icon, menu, and pointing) systems
  • Ethernet
  • Computer mouse
  • Built-in screens

Although these inventions all had the potential to be groundbreaking, Xerox actually did very little with them. They were famous for their copiers and they made considerable money from those copiers. But just because Xerox didn’t feel the need to capitalize on their innovations didn’t mean that no one else had the thought. 

Enter Steve Jobs

In 1979, Steve Jobs asked for a tour of the PARC facilities, offering Xerox an investment of $1 million in Apple. He was ecstatic about what he saw. One engineer at the time, Larry Tesler, described him as jumping around the room, shouting, “Why aren’t you doing anything with this? This is revolutionary!” 

According to the story, Jobs went back to Apple Development, told the team about everything he had seen at PARC, and suggested they work these innovations into their own products. Whether this is true or not, when Apple released Macintosh in 1984, it included features like GUI, a computer mouse, document-centric computing, and a built-in screen. This was the first mass-produced computer to have these features. 

Things got hard for Xerox after that. The world began to move towards the digital with email on the rise. Xerox almost went bankrupt in 2001 and eventually split from PARC as a cost saving measure. Although they eventually gained stability in their market again, there was a 20 year drop in their profits and stocks that they couldn’t get back. 

What Could Xerox Have Done Differently?

Unwillingness to adapt with the digital times was given most of the blame for the downfall of Xerox; but you also have to wonder what kind of success they would have had if they had better protected their computing IP. If they had chosen to act on it, instead of simply sitting on it. 

Investing in Apple was a great opportunity at the time that Xerox agreed to do so. But had they applied for and enforced patents for their computing inventions, or had they used a non-disclosure agreement (NDA), Macintosh might very well not have existed — or at least, it might have existed very differently. Xerox, instead, could have been the one to release a revolutionary computer. Instead of two decades of struggling to stay afloat, they could have continued to be a leader in computing innovation.

Don’t make the same mistakes. Don’t discount your innovation or take it for granted. Garcia-Zamor can help you by applying for patents, drawing up NDAs, and offering resources to protect your trade secrets. Contact us today to learn more.