PALO ALTO, Calif. — The site itself is unremarkable, save for the serenity of the nearby hillsides and the view of Silicon Valley in the distance. But Xerox's Palo Alto Research Center is no ordinary complex.
It is the birthplace of inventions that have helped change the world — including the mouse-driven personal computer, the laser color printer and the building blocks of modern networking.
Now, the 30-year-old center is at the end of an era. Once thought of as a pure research lab, PARC faces pressures to be more like other research parks that focus on improving high-tech bottom lines.
Xerox Corp., which failed to profit from some of PARC's biggest innovations, is losing money. Last week the Stamford, Conn.-based photocopier giant announced it was looking for "noncompetitive partners" who would buy a stake in PARC and help commercialize the work of its 300 researchers.
Venture-capital firms have expressed interest, among them Seattle-based Timberline Venture Partners, whose managing partner, Jeff Tung, once worked inside Xerox trying to take the company's innovations to market.
"I've seen all the gold nuggets lying around," Tung said. "Just because the gold miner has a leaky pan doesn't mean there isn't any gold there."
PARC became a Silicon Valley legend largely because its original mission was more like that of a university laboratory than a corporate research division, which tends to try to make existing products better, faster and cheaper.
"It allowed researchers who understood the issues so deeply — far more deeply than the managers — to see what was worth looking at and what was worth thinking about," said Robert Spinrad, PARC's director from 1978 to 1982. "There was a spirit and an excitement about the whole place because we were so clearly, so demonstrably ahead of the game."
Even a partial list of things invented or improved upon at PARC in the 1970s is impressive: the mouse; the personal computer, known as the "Alto" in PARC's labs; the laser printer; "what-you-see-is-what-you-get" word processing, in which documents appear on the screen as they will be printed; Ethernet, the standard for networking computers; and the graphic user interface that replaced all-text displays and was adopted by Apple and then Microsoft.
Apple founder Steve Jobs has said that when he saw the graphic interface as a 24-year-old visitor to PARC in 1979, he knew immediately it was the future of computing and ordered his nascent company to copy it.
PARC also anticipated the Internet long before it became a reality.
Spinrad proudly recalls having to analyze a technical problem for Xerox in the '70s. His team and its boss back East were in constant contact via e-mail and Ethernet connections, illustrating their ideas with online graphical systems and laser printers.
When the project was finished, Xerox threw a celebratory dinner in Connecticut. Spinrad reminded his boss that until then, they had never been in the same room together — a concept unheard of at the time.
"The scientists at PARC were given extraordinary leeway in pursuing 'the office of the future,"' said John Warnock, who left PARC in 1982 to co-found Adobe Systems Inc., which makes design and publishing software. "I had unprecedented freedom to pursue ideas, and was working with the best scientists in the business."
But with Xerox focusing on promoting its copiers and printers, it brought few of PARC's developments to market. And in those days, federal law didn't allow software innovations — such as a screen icon — to be patented. Many researchers published their work independently, or showed it at conferences.
Partly out of frustration and partly out of entrepreneurial spirit, some researchers left to start their own companies, like Warnock and Adobe co-founder Charles Geschke, or Ethernet developer Bob Metcalfe, who founded 3Com Corp. in 1979.
"In hindsight, you could say Xerox made a lot of mistakes," said analyst Tim Bajarin, who advises the company on the commercial applications of technologies developed in its labs, including PARC. "But there weren't a lot of visionaries back then, in Xerox or anywhere."
Competitive pressures on PARC and similar research centers have intensified in recent years. Now, new technologies at such labs are generally expected to reach market within a year.
Xerox hopes PARC's new partnership speeds that evolution.
"It's a way of really increasing both the size and the effectiveness of the park," Xerox chairman Paul Allaire told The Associated Press last week.
The company won't comment on prospective partners, but it's clear the venture capital firms expressing interest believe business opportunities are waiting to burst out of PARC after being bottled up during Xerox's financial crisis, which has been blamed on lagging sales, increased competitive pressure and a failed sales force reorganization that alienated some customers.
Since March, Xerox stock has fallen from about $30 a share to a low of $6.75 earlier this month. Xerox stood at about $8 in late-afternoon trading Friday.
Despite the company's falling fortune's, the PARC budget — about $60 million annually — essentially has remained stable for several years, spokesman Bill McKee said.
PARC is doing important work in several fields, including research into document conversion between formats, such as from personal computers to wireless devices.
The lab also is developing modular robots, microchips embedded with lasers and reusable electronic paper with millions of tiny black-and-white beads that can rotate to display text.