Xerox PARC To Exit The Mother Ship

Thirty-one years after Xerox Corp. founded its Palo Alto Research Center, whose inventions helped spark the computer revolution of the 1980s, Xerox decided it could no longer keep its brainchild in the fold.

The company said last week it will turn PARC into a wholly owned subsidiary shortly after Jan. 1, with an eye toward bringing in outside investors to help commercialize PARC inventions. Xerox also laid off 40 PARC researchers and staff, reducing head count to 230. It promoted associate center director Mark Bernstein, who joined PARC in 1979, to director, as former director Michael Paige stepped down. Xerox is seeking a CEO to lead the new company.

Xerox, laid low by declining sales and a botched reorganization that led to the ouster of its CEO last year, has in the past year shed assets, exited the equipment-financing business, and laid off 11,000 employees under current CEO Anne Mulcahy. The PARC divestiture has been planned since October 2000. "We basically put PARC on the table for strategic and financial reasons," Mulcahy said earlier this year.

The move is the latest in PARC's storied and often turbulent history with its parent. Xerox created the research center in 1970 to investigate the "architecture of information" and help Xerox build the office of the future. Research at PARC reached a creative zenith in the 1970s, spawning inventions such as the PC, Ethernet, and the graphical user interface. The center's labs once employed a who's who of computer scientists, including Alan Kay, Robert Metcalfe, Gary Starkweather, and John Warnock.

But researchers often clashed with product-development executives, and critics accused Xerox of being slow to commercialize many of PARC's innovations. "What we did at Xerox," says Chuck Thacker, chief designer of the pioneering Alto computer and now a distinguished engineer at Microsoft, "was spend money to simulate the future."