Technology may be applied in telecom and biotech fields

BURR LEWIS Herve Gallaire's challenge as president of Xerox Innovation Group is to do more with less. The research focus has never been "more open," he says.

By Richard Mullins
Democrat and Chronicle

(Thursday, January 31, 2002) -- Xerox Corp. Biotech researcher.

If those terms don't seem to go together, soon they may.

Freed from working for Xerox Corp. alone, the Palo Alto Research Center in California is now in research talks with telecommunications and biotechnology companies.

"A lot of the test equipment being developed by life sciences relies on capabilities similar to what we have done for small inkjet printers," said Herve Gallaire, promoted in October to president of the Xerox Innovation Group. "You can use the same (inkjet) technology to jet particles of DNA, parts of blood, whatever."

Xerox's research focus has never been more open, Gallaire said. And that's changing daily work at all Xerox labs, including the Wilson Center in Webster, bringing a mix of layoffs and new projects.

During an hourlong interview with the Democrat and Chronicle, Gallaire described the challenge for Xerox's research labs in 2002: Do more with less, and do it faster.

Xerox spent $1.01 billion on research and development in 2001, down about 3 percent from 2000.

"There is no new money. It's redistributed," Gallaire said.

The drive to broaden research intrigues some investors, especially a move to do more remote maintenance of machines.

"As you have more advanced remote diagnostics, you may not need to send someone to look at the device," said Solin Cho, an analyst with Morgan Stanley Dean Witter. "That could benefit Xerox down the road... . Still, if they really do view this as a growth company, they could pay for not spending more (on research) this year and next year."

A key priority for Gallaire is making an independent company out of the Palo Alto center, where Xerox researchers invented the personal computer, the mouse and the laser printer.

Gallaire said dozens of companies have spoken to Xerox about working with PARC researchers. Instead of Xerox supporting PARC, eventually Gallaire would like licensing of such work to generate half the center's revenue.

A key is attracting a few companies that do not compete with each other. For example, either General Electric or Siemens could be a customer of research in power systems, but not both at the same time.

PARC would license technology to one company or, better yet, several of them.

Gallaire said the company has had intense talks with telecom companies interested in PARC.

While no deals have been set, Gallaire said, "If you want to name one, I think you could say Corning... . With optical switches, we have developed laser technologies, systems that allow you to switch signals between fibers."

PARC has not yet hired a formal chief executive officer, Gallaire said. Meanwhile, his role has expanded.

Unlike past chiefs of research, Gallaire has responsibility for creating new spinoff companies. And he is in charge of handling all technology licensed from Xerox's labs.

Xerox has also become more aggressive in pursuing companies it believes pilfered technology created at its labs.

Gallaire has other plans for the Wilson Center in Webster, such as using the Internet to lace thousands of devices together that would work in concert.

"With today's devices -- everything is in the device. Tomorrow -- and we already have things like this in the lab here -- we have connected devices to services such as remote diagnostics, remote maintenance and color management," he said.

Including some solid ink technology, Xerox has 50 to 70 researchers focused on such new work, he said, with a budget of about $20 million per year.

Shifting focus also has meant cutting some workers. As scientists who worked in the basics of xerography retire, Gallaire said he hires programmers, network researchers and scientists in new solid ink technologies.

In November, budget cuts led to layoffs of 120 researchers worldwide, leaving Gallaire's group with 1,200 employees. Not all those job cuts were voluntary.

Research spending remains at 6 percent of Xerox's revenue, but that revenue has fallen more than 12 percent since 2000.

"Today, there is no plan within the Wilson Center to lay off any scientists," Gallaire said. "We have had a series of layoffs across the various centers, but this is now behind us."

What Xerox can look forward to is a busy year of products moving out of the labs and into the market.

Xerox officials plan to debut five major product platforms in 2002, including the massive iGen3 digital printing press, a new chemical toner, a computer system to control production printing and new office black-and-white printer/copiers.

The fifth, which Xerox has not yet publicized, has the code name "Brooklyn," originally a black-and-white machine that was changed into a color copier/printer, due for introduction this summer.

Frank Romano, a professor of digital printing at Rochester Institute of Technology, said Xerox is focusing on the right research.

"Xerox is starting to realize that they are not just selling printers and copiers anymore but major solutions, networking, remote sensing," Romano said. "They cannot be people that just make machines anymore."