The Xerox Alto was the first computer designed from its inception to support an operating system based on a graphical user interface (GUI), later using the desktop metaphor.The first machines were introduced on 1 March 1973, a decade before mass market GUI machines arose.
The Alto uses a custom multi-chip central processing unit (CPU) filling a small cabinet, and each machine cost tens of thousands of dollars despite its status as a personal computer. Only small numbers were built initially, but by the late 1970s about 1,000 were in use at various Xerox labs, and about another 500 in several universities. Total production was about 2,000 systems.
The Alto became well known in Silicon Valley and its GUI was increasingly seen as the future of computing. In 1979, Steve Jobs arranged a visit to Xerox PARC, in which Apple Computer personnel would receive a demonstration of the technology from Xerox in exchange for Xerox being able to purchase stock options in Apple. After two visits to see the Alto, Apple engineers used the concepts to introduce the Apple Lisa and Macintosh systems.
Xerox eventually commercialized a heavily modified version of the Alto concepts as the Xerox Star, first introduced in 1981. A complete office system including several workstations, storage and a laser printer cost as much as $100,000, and like the Alto, the Star had little direct impact on the market.
Xerox itself was slow to realize the value of the technology that had been developed at PARC. The Xerox corporate acquisition of Scientific Data Systems (SDS, later XDS) in the late 1960s had no interest with PARC. PARC built their own emulation of the Digital Equipment Corporation PDP-10 named the MAXC. The MAXC was PARC’s gateway machine to the ARPAnet. The firm was reluctant to get into the computer business again with commercially untested designs.
Xerox only realized their mistake in the early 1980s, after Apple’s Macintosh revolutionized the PC market via its bitmap display and the mouse-centered interface, both copied from the Alto. While the Xerox Star series was a relative commercial success, it came too late. The expensive Xerox workstations could not compete against the cheaper GUI-based workstations that arose in the wake of the first Macintosh, and Xerox eventually quit the workstation market for good.