Xerox Star was the actual goal and it came out 2 years before the Lisa and 3 before the Mac - it was never a masses product, and I'm not even sure Xerox was thinking masses outside of enterprise (which while huge isn't consumer-grade masses) for the entire of the PARC project(s) that led to the Alto / Star.
http://en.wikipedia.org/wiki/Xerox_Star
As far as doomed - their whole PARC enterprise is funded from the base-level patents they made, and XEROX made a 20x ROI on their Apple investment that lead to the PARC demo that launched the Lisa and Mac. I don't think Xerox failed in the slightest, and I'm not even getting into Novell, Adobe, and a number of other companies that came out of it all. They only failed if you think that the Mac was their goal - I don't think it ever was.
It was the Star and assorted office systems that evolved from it, as well as the fundamental tech that lead to it and a myriad of other companies and industries (printing, storage, networking, operating systems, systems integration, OOP and on and on). If you succeeded at one of these, you'd be called a good businessman. They invented and through many non-standard channels, propagated themselves into every device on the planet. Some 'fail'.
If you're going to fail - you're not going to cause companies to change direction and lead to the creation of other fortune 500s - you're going to fail in obscurity.
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BTw awesome sig - made my folks (both former CS drivers chuckle).