Did the computer scientist at Xerox really develop the first LAN, but had no backing from the company to further develop these technologies, later showing this to both Steve Jobs and Bill Gates?
Xerox developed ethernet. Was there a local area network preceding ethernet?
There was certainly wide area networking before ethernet, e.g. ARPANET dating from 1969.
There was also local networking even earlier, e.g. the IBM 1401, sold as a small mainframe in its own right, also ended up being used as a peripheral controller for larger mainframes; this arrangement could be called a network. But one feels it was not quite the same thing. So what was novel about the Xerox LAN?
Ethernet was designed to be a purely local network among peer workstations. And I think the Xerox Alto was the first general-purpose workstation in the sense that term came to be used.
So if you use the term LAN in that particular sense, I think the answer is yes, ethernet was the first.
The way I interpret Bob Metcalfe's words in this interview, the Xerox team used a Data General local area network prior to the work on the Alto, for which Ethernet was invented.
And we started working on this personal computer and I started working on how to network them together. And the predecessor system that we had also built used Nova 800s, a product of Data General. So we had, I think, we had 32 of them all tied together in a local area network. And this was a local area network built by Data General called the MCA, Multi-Processor Communications Adaptor, which was a, I believe, a 16-bit parallel cable that ran from one machine the other and carried data among them at about 1.5 megabits per second.
So that means that Xerox did not develop the first LAN, at least not in the view of the inventors of Ethernet.
With respect to the "got no backing from the company" part of the question, that presumably refers to the whole Alto effort, for which Ethernet was developed. Xerox made copiers, not computers!
In 1968 or so the Lawrence Radiation Laboratory, with several hundred terminals and at least four "host" computers (running applications), all communicating via a central PDP-6, decided to move to a distributed networking system with more direct connections between the computers, the PDP-8 terminal concentrators and peripheral systems. This was documented in a technical report by Samuel F. Mendicino, "The Lawrence Radiation Laboratory Octopus," presented at the Courant Institute of NYU on November 30th or December 1st, 1970, several years before Bob Metcalfe started developing Ethernet.
The move towards direct communication between individual machines, rather than having all communications go through the PDP-6, was for reliability and redundancy reasons:
Two major problems with this system became apparent about two years ago. The usefulness of the hosts, the data base, the interactive terminals etc., was totally dependent on the reliability of the central (PDP-6) system. If the central CPU or memory failed (often at times) there was no network at all. If a channel between a host and PDP-6 failed the host was isolated simultaneously from the data base, user terminals, and remote I/O.
Over those two years they built protocols (which they refer to as "sub-networks") for message routing (used in cases where direct connections between two hosts wanting to communicate were not available), terminal connectivity, file sharing (including files and directories shared between users), and remote peripheral (e.g., printer and card reader) access, and were continuing development further in this direction. The report's summary:
The original centralized LRL Octopus network was abandoned in favor of an almost fully connected distributed network. The network consists of a superimposition of sub-networks, each independent of the other, performing a specific network function.
Whether you consider this a true "LAN" like Etherent depends on your definition of "LAN," but this was clearly headed in that direction.
Rockwell Collins had a LAN based on time division multiplexing, not packets. This system goes back to the late 60s. I worked on it in the Air Canada reservation system, in Toronto, starting in early 1978. There were two loops, an 8 Mb TDX loop and 2 Mb TDM loop. The TDX loop was run on triaxial cable and the TDM on RG-58, IIRC.