The idea for the graphical user interface originated at Xerox's Palo Alto Research Center (PARC). The mission of PARC was to create the future without worrying about the commercial viability of the resulting technology. PARC was a scientific think tank staffed by brilliant software engineers. The PARC researchers created the Alto computer in 1973. The Alto represented many technological firsts, including bit-mapped textual graphics, Ethernet, the mouse, and a GUI interface. Xerox did not show any inclination to market the Alto. They believed that the Alto in its current form could not be sold for less than $40,000 given the industry's current gross margins.
In the late 1970s, Apple was experiencing meteoric growth in the mists of the success of the Apple II and significant private investment. Bill Atkinson, a software genius in charge of the Lisa project, convinced Steve Jobs to take a look at the possibilities of the PARC Alto.
"You could argue about the number of years it would take. You could argue about who might be the winners and losers in terms of companies in the industry, but I don't think rational people could argue that every computer wouldn't work this way someday."
Steve Jobs, talking about the PARC Alto
Jobs was so struck by the power inherent to the PARC that he offered Xerox the opportunity to invest a million dollars in Apple computer if the company would agree to let him and his Lisa team study Alto. Xerox felt that it had nothing to lose. After all, they couldn't sell it. They did not believe the world was ready for the advanced PARC technologies. Apple was about to go public and Xerox's investment branch, Xerox Development Corporation, sensed an opportunity to turn a quick profit. Xerox invested $1 million in Apple by purchasing 100,000 shares at $10 each. Furthermore, Xerox signed an agreement with Apple to never purchase more than 5 percent of Apple's outstanding shares. Within a year, these shares split into 800,000 worth $17.6 million when Apple went public.
With Xerox's cooperation, the Apple team twice visited the PARC facility. Jobs was ecstatic and immediately instructed the Lisa development team to begin working on a graphical operating environment like that of the Alto. The Lisa project was to be Apple's first attempt to built a computer around a graphical operating system and many of its technologies would later find their way to the Macintosh. Unfortunately, the Lisa, aimed primarily at high-end business users, never found commercial success. It has often been suggested that Apple's development of the Lisa GUI primarily centered around copying the Alto GUI. This shortchanges the hard work and brilliance of the Lisa team. Apple did not receive a blueprint from Xerox. What they got was much more profound: inspiration. Xerox had nothing to complain about. They had this wonderful creation that they couldn't sell. A 1760% increase on a one million dollar investment for two peeks at the PARC Alto was about the best the company could have hoped to achieve.
Jobs fell out of favor with the Lisa team and was placed on a road tour, beginning in December 1980, to drum up excitement for the company's original public stock offering. Afterwards, and due in no small part to the perceived view of his management skills, Jobs was given the opportunity to take over the Macintosh program, a relatively minor and unimportant project at the time. Soon after jobs got involved, the project went from a relatively minor research project to a serious, substantial, and likely to ship development effort with several dozen employees.
"A lot of people think we ripped off Xerox. But really, we ripped off Lisa."
Steve Capps, Finder co-author
Jobs intended to beat the Lisa to market and he was more than happy to "borrow" ideas from the Lisa team to accomplish this goal. Before long it became apparent that the Mac was shaping up to be a mini-Lisa. The Lisa, having been in development for over five years, made it to market first in 1983. Apple released Macintosh a year later in 1984.
Both computers were similar but with some very profound differences. The Lisa sold for $9,995 while the Mac sold for $2,495. The Lisa was marketed to business users and was meant to compete head on with the very popular IBM business deskop computers. The Macintosh was designed primarily for home use. The Lisa had a 5 MHz 68000 Motorola chip while the Macintosh had an 8 MHz 68000 Motorola chip. Lisa's operating system was written in Pascal while Mac OS was written in 68000 Machine Assembly Language, making it much faster. Lisa was much larger with a 12-inch black and white monitor. The Macintosh had a built-in 9-inch black and white monitor. The Macintosh was designed to be portable, weighing 16.8 pound, while the Lisa was a heavy desktop computer weighing 48 pounds. Lisa had two built-in 5.25 inch 871K Twiggy floppy drives. The Macintosh had one built-in 3.5 inch 400K Sony floppy drive with a connection port for an external 400K floppy drive. While Lisa had 1 MB of RAM, the Macintosh had a mere 128K of RAM. Lisa's RAM slots were expandable. Without a serious hack, Macintosh RAM was capped at 128K.
In the end, the Lisa went down as a dismal failure. It was the first Apple computer with a fully functioning GUI similar to but not quite the same as the Mac GUI. The $9,995 price tag put the computer in league with IBM's business offerings. Apple had no experience in this market and there simply was not enough software available. Apple tried to rectify this problem by bundling the Lisa with Lisa apps similar to MacDraw, MacPaint, and MacWrite but this only served to discourage third party developers. The Macintosh, although not the break away success Jobs had hoped it would be, was successful enough to keep Macintosh development moving forward. At $2,495, the Macintosh was somewhat expensive for a home computer but it was still priced low enough to allow significant market penetration.