How did Xerox’s strategic vision work in favor of or against the development of radical new technologies such as the Alto? Imagine the value of cornering the technological market in personal computing. How much would a five-year window of competitive advantage be worth to a company today? It could easily mean billions in revenue, a stellar industry reputation, future earnings ensured—

and the list goes on. For Xerox Corporation however, something strange happened on the way to industry leadership. In 1970, Xerox was uniquely positioned to take advantage of the enormous leaps forward it had made in office automation technology. Yet the company stumbled badly through its own strategic myopia, lack of nerve, structural inadequacies, and poor choices. This is the story of the Xerox Alto, the world’s first personal computer and one of the great “what if?” stories in business history.

The Alto was not so much a step forward as it was a quantum leap. Being in place and operating at the end of 1973, it was the first stand-alone personal computer to combine bit-mapped graphics, a mouse, menu screens, icons, an Ethernet connection, a laser printer, and word processing software. As a result of the combined efforts of an impressive collection of computer science geniuses headquartered at Xerox’s Palo Alto Research Center

(PARC), the Alto was breathtaking in its innovative appeal. It was the PARC’s answer to Xerox’s top management command to “hit a home run.” Xerox had profited earlier from just such a home run in the form of the Model 914 photocopier, a technological innovation that provided the impetus to turn Xerox into a billion-dollar company in the 1960s. The Alto represented a similar achievement.