Among the urban legends of Silicon Valley is a tale told by old-timers that the man said to have invented the personal computer, the late founder of Apple Inc., Steve Jobs, swiped the idea from Xerox Corp after a 1970s visit to its Palo Alto Research Center (PARC). A graphical user interface as an operating system that could be operated by the click of a mouse, the story goes, was originally created by PARC. It’s just that Xerox was in the copier business, and the idea of a user-friendly computer “for the rest of us”, as Jobs famously put it, was peripheral to its priorities. Jobs went ahead and created history, while Xerox was left coughing out copies of paper for the world. This is often cited as a case study to illustrate how disastrous it could be to miss a market opportunity.
It’s never too late to make amends, though. Or is it? As the Wall Street Journal reports, Xerox Holdings Corp is considering a $27 billion takeover of Hewlett-Packard (HP), which began in a garage and has survived many a market battle as a computer company. There would, of course, be plenty of synergy. HP has seen its computer margins shaven wafer-thin, and seems to depend on its printer division to a large extent, just as Xerox does. But mergers and acquisitions in the tech space don’t always work out. What looks good on paper often ends up reducing the valuation of the combine. Whether HP accepts the offer could depend on its optimism—or lack thereof—in the global market for laptops and desktops. If it can stay competitive here, a merger, while offering strength in paper-spewing segments, could end up disappointing its shareholders.
