Dealers of Lightning (54 page)

Peter
McColough, who viewed
PARC
as his legacy and
the World
Conference
as his party, took an intense personal interest in all
the
planning.
He
insisted that Ellenby deliver regular progress
reports
and
in late October even attended a dress rehearsal at Paramount.
From
these
encounters Ellenby took away an impression of
a deeply
bur­dened corporate chairman. McColough had lost the confident bright-
eyed glow visible at the
PARC
dedication seven years
earlier. In
its
stead
he
displayed the profound weariness of a captain steering a balky
ship through a merciless storm.

One
afternoon, treated to a private lunch with the chairman at the
Stanford Club in Palo Alto,
Ellenby
took the opportunity to regale him
with the full story of the aborted productization of the Alto III. The
war over word processing had been waged deep within the corporation
at the level of task forces and middle management. The chairman lis­tened raptly, evidently hearing it all for the first time. Then, warming
to his subject, Ellenby went too far.
He
capped the story with an amus­ing anecdote—at least he
thought
it
was amusing
—
illustrating the cyn­icism about
Xerox's
costly and fruitless product planning that afflicted
the company's own staff.

One
day during the
Alto
III campaign, he said, he had a conversation
with a friend from the corporate office. "John," the friend said, "you
really think you've got a product program there, don't you?"

"Well," Ellenby said,
"I
think it certainly could be."

"You're wrong," came the rejoinder. "I'll tell you when you'll know
you've got a product program at Xerox Corporation. You'll start seeing
people turn up and make a couple of big bottomless pits outside your
lab. Then trucks will drive up night and day loaded with hundred-
dollar bills, and just pour them into those pits. Your only job, John, will
be traffic control—and
that's
how you'll know you've got a product
program at
Xerox."

Instead of appreciating the wry yarn, McColough suddenly looked
stricken.
He
changed the subject and brought the encounter to a close
without giving Ellenby any clue to what had gone wrong.

He
soon found out. McColough had recently been wrestling with the
dire harvest of that same dysfunctional process.
For
the previous five
years, 1,000
Xerox
engineers and technicians had been working on a proj­ect code-named
Moses,
which aimed to develop the company's next
great copier.
Moses
would be the vanguard of the Xerox counterattack
against Kodak and its other big rivals. Fast and innovative, it was to offer
such pioneering features as a high-speed document handler that could
copy multiple pages by cycling them through the machine, wedged
between two layers of clear plastic.

But by 1977, after the expenditure of $90 million
—
more than Boeing
Corporation had spent in designing the 747
—
Xerox had not
yet
pro­duced a machine that could credibly compete in the marketplace. Worse,
Kodak had just introduced a superior product, with a document handler
so fast that the Moses version still on the drawing board was already obso­lete. Only a few days after his lunch with Ellenby, on the very eve of the
World Conference, McColough made one of the most painful decisions
of his career: He killed Moses outright.

The edict sent a shock wave through the entire company—not only
because of the horrific financial toll, but also because it meant Xerox
would have nothing but aging, derivative products in the market for at
least the next two years. "Moses was supposed to lead us into the
promised land," said one executive. "Instead the Red Sea came crashing
down on us."

Back at PARC, Ellenby recognized that McColough had been gird­ing himself to make the Moses decision at the very moment he was
telling his tactless joke. "He made a very tough call," he recalled later.
"And that was bloody stupid of me."

With the Moses debacle still painfully fresh, the Xerox World Confer­ence convened on November 7 at the Boca Raton Country Club. As
McColough hoped, the gaiety of the affair helped at least temporarily to
dispel the gloom. The company spared no expense to keep its 500 guests
entertained. There was deep-sea fishing and lavish dining. At one formal
luncheon the keynote speaker was Henry Kissinger, only lately retired as
secretary of state. A circus-sized tent was erected on the club grounds for
a casino night at which everyone received an allotment of scrip, which
winners could redeem for a motor scooter and other fancy prizes.

Meanwhile, Ellenby’s team worked like fiends to prepare for the
final day, which PARC would have all to itself. Willing to brook no hin­drance from Xerox policy or personnel, Ellenby kept in his possession
a signed letter from McColough ordering the organization to provide
anything he required in the event he found himself thwarted by a
recalcitrant bureaucrat. He never had to use it, which is not to say he
did not on occasion sail rather close to the wind.

"We broke Xerox rules when we needed to get things done," Ellenby
recalled. "Certain things were expensed that probably never should have
been." And not, to be truthful, only for conventional business. "Some of
the guys decided I needed to have an alligator in my bathtub. So they
went off in one of these airboats to where the pilot said he'd show them
some alligators. Two very hefty engineers jumped in and wrestled this
alligator into the boat, tied it up much against the protests of the pilot,
brought it back, and stuck it in my bathtub. I expensed the floatplane for
them, as 'special transportation' or some such thing."

The group's exuberance reached its climax on the conference's final
night, when Ellenby threw a party for the entire Futures Day team, from
engineers to truck drivers, at the Blue Bayou, a somewhat less than four-star Boca restaurant. The event was so festive it even attracted a few
senior executives from the more demure official dinner a few blocks
away—one of whom chose to drive his rented Lincoln Continental from
the restaurant back to the country club by the shortest possible route,
leaving tire marks all the way across the golf course.

Despite their week of conviviality, Xerox's guests might have been for­given if they greeted the dawn of November 10 thirsting for good news.
McColough's opening speech Monday morning had painted a dark pic­ture of the company's performance. "We are being out-marketed, out-
engineered, outwitted in major segments of our market," he lectured.
"We simply have not been prepared for this
. ..
We are now faced with
the urgent need for change within this company!" McCardell and David
Kearns, an up-and-coming ex-IBMer who would shortly succeed
McCardell as Xerox President, had followed over the next two days with
downbeat assessments of their own.

Finally, on the last day, Peter McColough again took to the podium,
this time in an attempt to revive the optimism with which he had tried
to lead his company into the digital age. His instrument was the same
vacuous phrase which had caused so much confusion from the start,
but now it carried much more urgency.

" 'The architecture of information,'" he proclaimed, "is still the basic
purpose of Xerox, except that it's no longer just a concept."

PARC's turn had finally come.

The Futures Day presentation that morning was like Doug Engelbart's famous San Francisco demo on steroids. The club's vast ballroom
boomed with portentous music. "The problem is paper," intoned a
professional narrator, while actors and PARC engineers piled onstage
to demonstrate Altos, the Ethernet, even a prototypical color printer,
all working in perfect harmony to establish Xerox's rightful place atop
the world of office automation.

The audience watched people send and receive real e-mail, collabo­rate on joint projects, write memos in Japanese characters, and conjure
up engineering schematics on the Alto's arresting black-on-white dis­play—all live. Secretaries typed letters and shot them over the network
to a laser printer, while engineers designed buildings on a video screen
and software developers debugged code. If there had been any doubt
that PARC could develop a marketable product, it was dispelled by the
debut of the Xerox 9700—a two-page-per-second laser printer based
on Starkweather's machine that would anchor the company's lucrative
franchise in that developing market for years to come. But even the
9700 was trumped by the Pimlico, a prototype color laser printer built
by Sproull and Ron Rider as a rush job for the Boca demo.

Adding to the thrill was the element of pure surprise. Determined to
keep the demo shrouded not only from the prying eyes of IBM, which
maintained a research lab nearby in Boca Raton, but from Xerox's own
executives, Ellenby had taken the precaution of hiring his own security
force (provided by a company conveniently owned by the Dade
County sheriff's son-in-law).

"So Futures Day came as a complete shock," Ellenby recalled. "Not
only the breadth and comprehensiveness of the products but that they
all worked flawlessly was quite astonishing to the senior management."

Finally the wowed audience trooped off to a catered lunch while a
platoon of forklift trucks moved the equipment off the stage and into a
capacious demonstration room, where they would be accessible for
hands-on demos for the rest of the day. Unbeknownst to the guests,
this part of the demonstration almost failed before it started, for
Florida's humidity and the club's meager air conditioning made the
room so hot it threatened to blow the computers' delicate circuits.
(The Altos always behaved flakily in hot weather, even at home in Palo
Alto.) Ellenby averted catastrophe by renting one of the refrigeration
trucks Eastern Airlines employed to keep its planes cool on the ground
at the Miami airport. Since the vehicle was not licensed to drive on
public thoroughfares, it was provided with a state police escort to Boca
Raton, where Boggs and Sproull managed to ran a ventilation pipe
through the kitchen and into the meeting center.