On the West Coast, the Self group at Sun Microsystems Labs, headed by David Ungar and Randall Smith, spent years working on some really radical virtual machine technology, originally with the goal of getting their prototype-based object language, Self, to perform well. They had a very advanced VM architecture, with excellent garbage collection, but the real challenge was in the compilation technology, because Self, like Smalltalk, was a pure object language, meaning that all the basic data-types in the system were real objects, unlike C++, Java, or C#. That, combined with the fact that Self (also like Smalltalk) is a dynamically-typed language, imposes a significant cost when manipulating really fundamental things like booleans and integers, because when the compiler sees a+b, or (flag ifTrue: [...]), it can't assume that they are integers or booleans, because they might be something else, each and every time they get executed, and you have to handle those other cases somehow. Also, both Self and Smalltalk depend on Blocks (function objects with closures) for all control structures, which also imposes a lot of overhead.
Making the problem even worse for Self was the fact that they didn't have any direct variable access- ALL variable access had to go through accessor methods (the apparent variable access syntax was just sugar for accessor messages). So they put a tremendous amount of effort into better compilation technology.
The real breakthrough on the VM side came with Urs Hoelzle's type-feedback compiler, which for the first time allowed the vast majority of message sends in general purpose code to be inlined. Once things are inlined (often many levels deep), the compiler can do a much better job of optimizing the code, and this is necessary to produce big performance gains. This requires a lot of really exotic technology, like optimistic inlining with the ability to deoptimize and back out on-the-fly if something happens that violates the optimistic inlining assumptions.
The Self system was a real research tour-de-force, but Self has quite a few fundamental differences from Smalltalk, and the system was not designed for commercial or production use, since it was not very stable and used an enormous amount of memory. But it showed for the first time that pure, dynamically-typed languages like Self and Smalltalk in principle could be gotten much closer to the performance of C.
On the East Coast, I (Dave Griswold) was frustrated with the fact that there were still a lot of obstacles to using Smalltalk in most kinds of production applications. ParcPlace and Digitalk had made a lot of progress, especially with Deutsch/Schiffman dynamic translation technology, which sped up Smalltalk by a factor of 1.6 or so at the time. But it was still way too slow for any kind of compute intensive application (which I was doing), and I felt there were several other obstacles to widespread use as well. One of the biggest among these in my mind was the lack of any kind of type system, which although it makes the language extremely flexible, also means that organizing and understanding large-scale software systems is a lot harder. Another was poor support for native user interfaces, in the interest of portability. Although this was a nice idea for people who were ideologically dedicated to portability, in practice at the time (and to a large extent even now) people needed to write UIs that weren't out of place on Windows machines (emulated widgets just don't cut it).
Several people had tried to build type systems for Smalltalk (Borning&Ingalls, Palsberg&Schwartzbach, Graver&Johnson), but it was clearly an enormously difficult task, because of the vastly more flexible nature of the way Smalltalk is used compared to any existing statically-typed language, not to mention the unprecedented problem of having to retrofit a type system onto existing untyped code. In addition to the fact that none of the few existing type-system efforts worked on anything other than tiny bodies of code, it was obvious that none of the previous efforts were even close to being the right kind of technology for the real world.
However, I was convinced that it was possible to do something about it, and so I hired Gilad Bracha, who knew a lot about this stuff, and who also had neat ideas about mixins and things, and we set about building a type system for Smalltalk that would actually work. The first generation of the type system, which we wrote about in the '93 OOPSLA proceedings, worked but was pretty ungainly because it was grafted on top of the ParcPlace libraries. This makes things a lot harder, because to really do a typed Smalltalk right, you need to structure your basic libraries differently so you can typecheck the inheritance relationships. The existing Smalltalk libraries are full of inheritance relationships that just aren't subtype compatible (e.g. Dictionary and Set), and so we had to use a declared hierarchy that differed from actual underlying hierarchy.
At the same time, I was exploring various paths to speeding up Smalltalk (since the type system was not used for optimization), but without the kind of exotic optimistic-inlining technology the Self group used, the obstacle seemed insurmountable. The best inlining approach I could come up with without type-feedback was basically a form of a technique the Self group used, customization (copying methods down through inheritance, which means, in this case, that the class can be treated as constant, allowing self-sends to be inlined), but I computed that for the ParcPlace library the best that would do would be to inline about 25% of sends, statically.
I suspect other people trying to make Smalltalk faster were running into basically the same problem, and we all thought the Self system had the kind of technology that would eventually solve the problem, but it looked so advanced and complicated that it looked at least 10 years away from commercialization. I think that incredible apparent difficulty was what stopped everyone else from adopting the Self technology. It was just too daunting.
The two technologies came together when I started talking to Urs Hölzle, who had finished the second-generation Self compiler (and his Stanford thesis), and was looking for something interesting to do. After reading his thesis on type-feedback, I realized that the type-feedback technology was actually not as conceptually difficult as most people had thought: people had read all the Self papers and been impressed but terrified of it. No one else seemed to pick up on the fact that the type-feedback technology was actually nicely suited for a good, production-quality compiler, although a lot of changes and adaptations were needed compared to the way it was used in Self.
So this was a perfect opportunity- with Urs' technology (as well as Lars Bak, who had done a tremendous amount of work on the Self VM and knew its architecture inside and out), we had a type system and a compilation technology, which together were perfectly suited for a great production Smalltalk system, since they were independent of each other. This independence was critical, since the system would need to accept untyped as well as typed code, so that people could use the type system as much or as little as they wanted to, without impacting performance.
So then we found some other really talented people, and put together a great team (in alphabetical order):
As mentioned in the introduction, work started on the system in the fall of 1994, and by 1996 the system was working nicely, but then the Java phenomenon happened and we eventually had to switch to Java before ever releasing it. The only public display of the technology was in late 1996, when we had a booth at OOPSLA and got quite a bit of attention. A few people got to evaluate it privately, and got terrific benchmark results (one well-known guy even got a speedup of 12 on some real Smalltalk code), but after that it disappeared from view, as we focused on Java.
As for the future: Strongtalk contains innovations that are still far ahead of virtually any existing mainstream language or VM. Now that Strongtalk is open source, the future is up to you!