Where are they now? They're still around, albeit losers for the desktop. Digital Research moved sideways, having been swallowed up by Novell. Xerox are now into printing. However, PARC is still a powerhouse of innovation. The idea of WIMP GUIs was PARC's -- and they're really the ones with the vision, not Bill Gates IMO.
IMO MS got the upper hand by use of strategy that made it at least expensive for large-scale OEMs to switch to rival OSs and would probably be illegal now. Back in the day, just about everyone sued everyone else and it was those with the best lawyers and the sneakiest strategists that seemed to prevail. The US authorities investigated and forced MS to switch licensing model. DR sued and won extensive damages, but the harm had already been done, MS-DOS had gained unshakeable dominance and so GEM had no real chance. MS engaged in further dodgy practice by using undocumented APIs to ensure that some MS products would only run on its own versions of DOS.
Meanwhile, UNIX was ticking away quietly and various implementations were employed in just about everything other than the desktop and DEC (Vax). UNIX-clone GNU was born from a belief that software should be free (as in "free speech" rather than "free beer"!) The stage was now set for Linus Torvalds, who started work on a Minix-compatible kernel, and Linux was born. However, there is still an issue with unfair competition as it's almost impossible to buy a new PC (i.e. x86 or x64) that doesn't have Windows installed. I understand that this is because MS has a contract with most (if not all) major OEMs, who are obliged to bundle Windows with their product. So about the only way I can find to get a new machine without Windows is to be your own OEM: To purchase a barebones system and add memory, hard drive, etc., buy a kit, or to buy all the components separately -- but the latter will probably cost more than the equivalent pre-built machine with Windows installed.