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Commentary: Xerox's woes may lead to greater innovation

The copier maker's problems may result in something that would likely be good news for the IT industry: new partnerships and heightened innovation from its Palo Alto Research Center.

By James Lundy, Gartner Analyst

Xerox's well-publicized troubles--the result of a failed sales-force reorganization that caused the document management giant to hemorrhage customers and cash--have few bright spots for the company or its investors. However, Xerox's problems may result in something that would likely be very good news for the IT industry: heightened innovation from the company's highly respected but underused Palo Alto Research Center (PARC).

The corporate restructuring announced Tuesday is predictable in its broad outlines--staff reductions and sales of nonessential assets--but surprisingly lacking in details. One detail does stand out, however: Xerox is actively seeking "noncompetitive partners" to share the cost of running PARC and the intellectual property that results from its research.

It would be all but impossible to exaggerate PARC's importance to the IT industry. The facility has a long history of computing innovations, including most of the breakthroughs that led to client/server computing, and yet Xerox has never fully capitalized on the technology that PARC developed. One of the most famous examples of unrealized potential in IT history is the graphical user interface that PARC developed, which Apple Computer and Microsoft went on to adapt and introduce as Mac OS and Windows, respectively.

Microsoft, which recently invested in the Xerox spinoff, ContentGuard, would likely be highly interested in a PARC partnership. So would Sun Microsystems, which has a long-standing relationship with Xerox.

Overall, the formation of strategic partnerships with companies such as Microsoft and Sun would be a wise move for Xerox--and one that Gartner has been predicting for some time. A better-funded PARC, with high-profile industry partners, would be in a much better position to exploit the facility's innovations.

One thing is certain: Whatever impact this move has on Xerox, it can only be good for the IT industry.

(For related commentary on Xerox's PARC operations, see registration required.)

Entire contents, Copyright ? 2000 Gartner Group, Inc. All rights reserved. The information contained herein represents Gartner's initial commentary and analysis and has been obtained from sources believed to be reliable. Positions taken are subject to change as more information becomes available and further analysis is undertaken. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.