> the computer they wanted was DEC PDP-10. At this point, Paul Strassman was replacing every IBM and DEC machine at Xerox with an SDS machine.
This scenario must have played out in multiple places. I was involved in one of them.
I was working at Tymshare, and we were evaluating the PDP-10 and the Xerox (XDS/SDS) Sigma 7.
My manager called me into his office.
---
Mike, this conversation is strictly between you and me. If anyone asks, I will deny it happened.
You are our best Sigma 7 expert, and even you prefer the PDP-10.
We're doing final acceptance tests on the Sigma 7. If all the tests pass, we have to commit to it. If enough tests fail, we can return that machine.
---
I got the hint. Challenge accepted!
Knowing all the ins and outs of the Sigma 7, I found a few subtle ways to make it crash at random times, without any indication that anyone had interfered with the tests.
Eventually I slipped up and left my username visible in a core dump.
Back to my manager's office.
---
Mike, we have a problem. Xerox figured out that you were messing with the Sigma 7 system software. We told them we would fire you. So, you're fired. You can't be in the office any more.
But you do have your Teletype at home, right? You have some projects to do on the PDP-10. Can you work on those and stay away from the Sigma 7?
Keep track of your hours, and after this blows over we will hire you back and give you that back pay.
Very interesting story and well written so far, I'll finish it after work.
One very interesting thing about Xerox was not only their technology but their choice of business model. As smaller companies couldn't afford an expensive copier, they'd "rent" it and charge per copy. From the article:
> The company placed machines in well-traveled public spaces where it was on display, and in addition to sales, they also offered machine rental for smaller organizations. This was a low price for up to 2000 copies, and each copy after was 4¢. They also promised that a machine could be returned within fifteen days. The 650 pound behemoth was wildly successful.
Another similar interesting business model was pioneered by Rolls-Royce in their airplane turbine business. Instead of selling their whole turbine, they'd "rent" it and charge it "per flight hour", derisking both parts.
My father worked for Haloid for a bit. Worked there while also attending NYU. Layer he moved to Kodak and in 1967 our family moved to Rochester. My father retired from Kodak in 1985.
Xerox and Kodak were both amazing companies, and created a comfortable middle or upper middle class lifestyle for many thousands of Rochesterians.
As someone who has lived in Rochester recently, I am incredibly curious to hear from folks who saw the peak of the city. I often hear of Kodak and Xerox providing hefty bonuses which also made the local businesses offer deals then for a better turnover. Would love to hear more from you.
The main "hefty bonus" was treating employees exceptionally well and providing a lifetime of employment. And for us kids, it was an idyllic environment in which to grow up.
Solid read! I started my career of at a former Xerox R&D that was acquired by NAVER Labs, which is an interesting story in itself of passing of time and the new (AI R&D) replacing the old (print technology):
https://www.news.xerox.com/news/NAVER-to-acquire-Xerox-Resea...
In the end it's all about managing the incentives to be aligned -- the exploitation side needs to not consider the discovery side a threat if it challenges their current exploitations.
If you want to see what a dismal company Xerox is check its share price over the last fifty years. Even accounting for stock splits and dividends the performance is dire for a technology company.
For someone not inclined to dredge up all that data and do the calculations to factor in dividends, where can we take a look at it?
It's a bit of a miracle any technology company that old is still going after all these years. "Dismal" does not seem like an accurate way of characterizing it.
(for someone just taking a glance at the stock price chart, which doesn't take into account dividends, it looks like they were performing well financially until COVID?)
Is there anything on that site that would, as I asked, factor in dividends when analyzing the company's performance? It's a classic problem when comparing stock charts with one another (or against the index) that they don't take into account dividends in a meaningful way.
"Wow, that line has been flat for a long time! Why does anyone think this is a good investment?"
(not meant to be a commentary on Xerox's performance at all - they're clearly in a bad state right now)
Dividends are so out of favor now for most companies, it's not something I have personally cared that much about. But it is important to get a true picture, especially over very long timelines before tax laws changed that made buybacks more efficient.
Thanks for the total return chart. Comparing XRX to IBM was interesting. A long term XRX investor who was perceptive enough to get out before the 1999 crash would have been very happy indeed.
Something like three fourths of the S&P 500 pay a dividend, so it's not really an irrelevancy.
there are many reasons for this, but I can only comment that they should have left GIS alone, and not let ACS divest. They'd have been stronger this decade with those performing assets.
In addition to all the technical detail, you learn so much about corporate hubris in their massive quest for non-innovation (resting on their laurels).
C-level staff ignored the brilliance of their Alto computer, invited Steve Jobs over in exchange for a few shares of AAPL IPO [which they almost-immediately sold], and left all their computer researchers scratching their heads as to why staff were being ignored.
> the computer they wanted was DEC PDP-10. At this point, Paul Strassman was replacing every IBM and DEC machine at Xerox with an SDS machine.
This scenario must have played out in multiple places. I was involved in one of them.
I was working at Tymshare, and we were evaluating the PDP-10 and the Xerox (XDS/SDS) Sigma 7.
My manager called me into his office.
---
Mike, this conversation is strictly between you and me. If anyone asks, I will deny it happened.
You are our best Sigma 7 expert, and even you prefer the PDP-10.
We're doing final acceptance tests on the Sigma 7. If all the tests pass, we have to commit to it. If enough tests fail, we can return that machine.
---
I got the hint. Challenge accepted!
Knowing all the ins and outs of the Sigma 7, I found a few subtle ways to make it crash at random times, without any indication that anyone had interfered with the tests.
Eventually I slipped up and left my username visible in a core dump.
Back to my manager's office.
---
Mike, we have a problem. Xerox figured out that you were messing with the Sigma 7 system software. We told them we would fire you. So, you're fired. You can't be in the office any more.
But you do have your Teletype at home, right? You have some projects to do on the PDP-10. Can you work on those and stay away from the Sigma 7?
Keep track of your hours, and after this blows over we will hire you back and give you that back pay.
---
So I did. And they did!
Whenever I read about Xerox, it reminds me of the story that their scanners would randomly change numbers on prints
https://dkriesel.com/en/blog/2013/0802_xerox-workcentres_are...
Very interesting story and well written so far, I'll finish it after work.
One very interesting thing about Xerox was not only their technology but their choice of business model. As smaller companies couldn't afford an expensive copier, they'd "rent" it and charge per copy. From the article:
> The company placed machines in well-traveled public spaces where it was on display, and in addition to sales, they also offered machine rental for smaller organizations. This was a low price for up to 2000 copies, and each copy after was 4¢. They also promised that a machine could be returned within fifteen days. The 650 pound behemoth was wildly successful.
Another similar interesting business model was pioneered by Rolls-Royce in their airplane turbine business. Instead of selling their whole turbine, they'd "rent" it and charge it "per flight hour", derisking both parts.
It's interesting how these models keep reappearing whenever technology gets expensive, complex, and mission-critical
My father worked for Haloid for a bit. Worked there while also attending NYU. Layer he moved to Kodak and in 1967 our family moved to Rochester. My father retired from Kodak in 1985.
Xerox and Kodak were both amazing companies, and created a comfortable middle or upper middle class lifestyle for many thousands of Rochesterians.
As someone who has lived in Rochester recently, I am incredibly curious to hear from folks who saw the peak of the city. I often hear of Kodak and Xerox providing hefty bonuses which also made the local businesses offer deals then for a better turnover. Would love to hear more from you.
The main "hefty bonus" was treating employees exceptionally well and providing a lifetime of employment. And for us kids, it was an idyllic environment in which to grow up.
Solid read! I started my career of at a former Xerox R&D that was acquired by NAVER Labs, which is an interesting story in itself of passing of time and the new (AI R&D) replacing the old (print technology): https://www.news.xerox.com/news/NAVER-to-acquire-Xerox-Resea...
How hard it is for an organization to be good at both discovery and exploitation at the same time
In the end it's all about managing the incentives to be aligned -- the exploitation side needs to not consider the discovery side a threat if it challenges their current exploitations.
If you want to see what a dismal company Xerox is check its share price over the last fifty years. Even accounting for stock splits and dividends the performance is dire for a technology company.
For someone not inclined to dredge up all that data and do the calculations to factor in dividends, where can we take a look at it?
It's a bit of a miracle any technology company that old is still going after all these years. "Dismal" does not seem like an accurate way of characterizing it.
(for someone just taking a glance at the stock price chart, which doesn't take into account dividends, it looks like they were performing well financially until COVID?)
Easily found on Google finance or similar sites: https://www.google.com/finance/beta/quote/XRX:NASDAQ?sa=X&sq...
Not quite 50 years, but you get the idea.
Is there anything on that site that would, as I asked, factor in dividends when analyzing the company's performance? It's a classic problem when comparing stock charts with one another (or against the index) that they don't take into account dividends in a meaningful way.
"Wow, that line has been flat for a long time! Why does anyone think this is a good investment?"
(not meant to be a commentary on Xerox's performance at all - they're clearly in a bad state right now)
Looks like this site does: https://totalrealreturns.com/n/VFINX,VBMFX,USDOLLAR,XRX
Dividends are so out of favor now for most companies, it's not something I have personally cared that much about. But it is important to get a true picture, especially over very long timelines before tax laws changed that made buybacks more efficient.
Thanks for the total return chart. Comparing XRX to IBM was interesting. A long term XRX investor who was perceptive enough to get out before the 1999 crash would have been very happy indeed.
Something like three fourths of the S&P 500 pay a dividend, so it's not really an irrelevancy.
That's fair if you look at Xerox through the lens of "tech company returns"
there are many reasons for this, but I can only comment that they should have left GIS alone, and not let ACS divest. They'd have been stronger this decade with those performing assets.
so yeah, thanks Carl.
Another decent read on this subject is 'Dealers of Lightning: Xerox PARC and the Dawn of the Computer Age' by Michael A. Hiltzik
This is my favorite geeky non-fiction book.
[•] <https://www.amazon.com/Dealers-Lightning-Xerox-PARC-Computer...>
In addition to all the technical detail, you learn so much about corporate hubris in their massive quest for non-innovation (resting on their laurels).
C-level staff ignored the brilliance of their Alto computer, invited Steve Jobs over in exchange for a few shares of AAPL IPO [which they almost-immediately sold], and left all their computer researchers scratching their heads as to why staff were being ignored.
[dead]