Design Lessons from the Alto III

Photo of the Xerox Alto computer by Maksym Kozlenko.

Most people have never heard of the Xerox Alto III. Although this lack of name recognition is sad, it is hardly surprising, since it is a product that never made it to market. Nevertheless, why it was never manufactured, despite its huge technical advantages over the competition, is a cautionary tale worth considering.

The first Alto computer was developed in 1973 at Xerox’s Palo Alto Research Center (PARC). The computer science innovation that happened at PARC in the 1970s is the stuff of legend. Many of the technologies that we associated with the modern computer era were developed there including the windows-style graphical user interface (GUI), the mouse, object-oriented programming, ethernet communication, and laser printing. This is an impressive resume of hardware and software innovation for any company, but particularly for one that specialized in photocopying.

Although they were first developed within Xerox, it was other companies —IBM, Apple, Microsoft, 3Com, and Adobe, among them— that would ultimately profit from these technological innovations. And PARC in the 70s was not just an incubator for ideas. Many of the researchers were ultimately snatched up by these rival companies or, in some cases, started companies of their own. In his book Dealers of Lightning, Michael Hiltzik provides a wonderful history of this period.[1] He describes some of the reasons why different products faltered and why Xerox failed to capitalize on the incredible innovation going on within PARC. One telling example is the story of the Alto III.

The original Alto was developed in 1973 and featured many of these innovations such as the GUI and mouse. Unlike many of the large time-sharing computers of the time, which would be the size of multiple refrigerators, the Alto fit under the desk. It was also networked, which allowed multiple computers to be connected via Ethernet to communicate with each other and share resources. The Alto II was developed around 1976, was more powerful, more reliable, and designed to be more easily assembled and maintained than the first Alto. A small production line produced about 2000 over their lifetime. Those fortunate enough to obtain one of these machines were in awe of its capabilities.

The PARC employee who oversaw the development of the Alto II, John Ellenby, was put in charge of developing a newer version that could be truly mass produced. The goal was to have the Alto III available by mid-1978. It would have a word processor, a spreadsheet, and be programmable by the user. Unfortunately, the IBM 5150 Personal Computer came to market in 1981. Despite being much more limited in its capabilities, it sold over 200,000 units in its first year. The Alto III never even went into production.

The reason for that decision is enlightening. The design was to be developed by Xerox’s Special Programs Groups (SPG) at PARC in California and manufactured by the Office Systems Division (OSD) based out of Dallas. The latter was responsible for typewriters and non-copier technology. They had developed a low-performance word processor, essentially a typewriter with some memory and editing capabilities, but it had been a failure. Rather than building the Alto III, Robert Potter, the head of OSD, wanted to put out a new machine of their own (the Xerox 850). The two sides battled over the costs of the two designs, but despite a stronger financial and technical case for the Alto III, the 850 was ultimately the product that was produced.

The source of OSD’s resistance to the Alto III was financial. Their annual bonuses were tied to meeting specific sales targets, targets they could not hit if they were forced to add an entirely new line of product. The likelihood of lost bonuses caused the folks in Dallas to dig in their heels. Ultimately, they were able to make the political moves necessary to get the word processing task force —the group who would select which of the two alternatives to manufacture— to reverse their original decision and support the Xerox 850.

Engineers like to think in terms of quantifiable, objective measures such as cost, efficiency, reliability, or ease of manufacturing. Yes, design will always involve trade-offs; different options have their own advantages and disadvantages. But even while balancing all the constraints and objectives, the intention is still to identify the best overall solution. Unfortunately, much of what makes a design successful —both internally within the company and externally in the marketplace— is often not about the design’s technical merit. People are making the decisions, and everyone involved will have their own biases, motivations, and agendas. The lesson of the Alto III is that getting a design to market requires that both the technical and the human obstacles be navigated successfully.


  1. ^ Hiltzik MH. Dealers of Lightning: Xerox PARC and the Dawn of the Computer Age. HarperCollins, 1999.

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