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It is the end of an era. Last week, Xerox Corp.—in conjunction with the release of its (surprisingly good) Q1 2023 financial results—announced that it had “donated” its storied Palo Alto Research Center (PARC) tech incubator to SRI International, a non-profit research institute that itself is the result of a spinoff from Stanford University. Over the decades, PARC has introduced innovations like the laser printer engine, the mouse, the graphical user interface (GUI), the PC as we know it, Ethernet network connectivity, and even the early origins of what would become the Internet. Thanks to PARC’s innovations, Xerox was always in the top five of companies filing patents in the US each year.
While the move may be sad for long-time Xerox watchers, it’s not entirely surprising. When the company restructured internally a few years ago, PARC was set up in its own business division. We opined at the time that Xerox seemed to be positioning any or all of the divisions for a future sale or spin-off. Sink or swim time. With 1,000 employees, PARC was no doubt a drain on Xerox’s financial and management resources.
Xerox is not parting ways entirely with PARC. As part of the “donation,” Xerox will retain a “preferred research agreement called the Technology Exploration and Innovation Program, in which SRI will provide contracted research and development services to Xerox and its clients.” So Xerox will still have access to the PARC brain trust for any technological developments that are in the company’s (or clients’) interests—at a cost lower than having all of PARC’s operations on the books.
And let’s face it: Xerox never knew how to monetize most of PARC’s innovations. IBM and Microsoft get credit for the PC, and Steve Jobs walked out the door after a tour of PARC and literally had his people copy the GUI and mouse (admittedly, with improvements). Plus, the vast majority of innovations coming out of PARC—like this super-geeky bridge monitoring technology that went bust a year later—did not revolve around Xerox’s core of document imaging, digital transformation (DX), or IT services businesses, and were nothing that Xerox itself would ever commercialize.
In fact, in the long run PARC is probably better off being part of a non-profit organization. Now its certified geniuses are free to pursue innovation for innovation’s sake, rather than having to worry about quarterly financial results. And Xerox is better off, able to focus its R&D money on technology directly relevant to its customer base.
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