Atari - rise and fall of a legend

On June 27th, 1972, a young, graduated engineer from the University of Utah, Nolan Bushnell, together with his friend, Ted Dabney, wanted to start their own company: Syzygy.

They wanted to sell a new type of game that Nolan had just developed, called 'Pong' (he later admitted that he had seen a prototype of 'Odyssey' by Magnavox, the American 'Philips', earlier that year).

But they then realized that another company already had the same name (Syzygy: sun, moon, and earth in total eclipse). So they decided to name the new company Atari (a word from the Japanese game Go, meaning something like 'check' in chess) and give it the well-known Fuji-symbol (from the Japanese mountain Fujiyama) as its logo.

After having founded their new company with an investment of just $500, the sales of 'Pong' (arcade version) were fantastic.

Because there was no competition available at that time, Nolan and his friend Joe Keenan founded Kee Games to artificially provide competition for Atari.

In 1974, Atari and Kee Games merged, and Joe Keenan became President of Atari.

Many famous people joined Atari at that time; among them Steve Jobs (who programmed Breakout) and Steve Wozniak. Later on, they founded Apple Computers!

Bushnell realized the big potential hidden in the Pong game and decided to develop a version for home use.

His managers were against the idea, but Bushnell convinced them, and so the development of Home-Pong began at the end of 1974.

In the beginning of 1975, a manager of Sears & Roebuck heard about this machine and offered Bushnell to buy all of the manufactured units of Home-Pong. He also offered Bushnell to finance all further production and to pay for all ads as well. Atari only wanted to build 50,000 units of Pong, but Sears requested about 150,000 units. Sometimes, Bushnell had to help manufacturing units because of the big success (Christmas 1978, see picture below).

Image provided with permission from: 
The Atari Historical Society

In 1976, a company called Fairchild presented a video-game console with changeable modules, the Fairchild Channel F.

Atari decided to develop a comparable machine as well (the project was called Stella after the bicycle brand name owned by one of the developers: Joe Decuir), but had to hurry; Fairchild had a remarkable advantage...

But Atari faced a serious problem: money. Atari didn't have enough money to produce and sell their new machine, and so Bushnell decided to sell Atari to Time Warner for about $28,000,000!

Time Warner wanted Atari to become the market leader in video games and invested around $100,000,000. In October 1977, the Atari VCS entered the market together with just ten games...

In 1978, Atari moved a step forward. The first Atari home computers, the Atari 400 and 800, were released. A whole bunch of peripherals were also available.

Nolan Bushnell left Atari in 1978.

Atari formed one third of Warner Communications' total annual income and became the fastest growing company in the history of the United States of America.

In 1981, Atari released the Atari 5200 SuperSystem. This machine was just an Atari 400 with no keyboard and some minor modifications. The most noticeable change was the joysticks. Atari used analogue ones instead of the digital ones they invented with the 2600. No one wanted a system with such poor controls, and so the 5200 (quite a good machine) didn't have any success. It was sold only in the U.S.! Atari put its focus back on the 2600, the computers, and the arcade machines.

Atari had a strong position in 1981. They ruled about 75% of the home video game market, about 40% of the arcades, and had a big portion of the home computer market. They weren't number one in that field, but they had their sales... and Atari released new computers like the 600XL and the 800XL.

In 1983, a big crash threatened the whole industry. No one wanted video games any longer because nearly all people owned a video game at that time, and the Commodore 64 entered the market. Games for the C64 were cheaper than games for the 2600; and, of course, much better. The Commodore 64 outperformed the Atari computers as well.

But Atari didn't want to give up. On the Winter CES in Chicago, they presented the Atari 7800 Pro System. But presenting doesn't mean releasing. Finally, the 7800 was released in 1986!

Again, a very good machine, able to play all 2600 games, but released far too late to save Atari... For a time, Atari was facing losses up to $2,000,000 daily...

'The Stormtroopers are coming!'

On July 2nd, 1984, Jack Tramiel, former owner of Commodore, took over 51% of Atari Corporation from Time Warner (they kept 25% of the stocks) and installed himself and his sons as new managers of Atari. They wanted to cut costs and fired about 3,500 employees (only about 1,500 were left). Imagine: Once, in 1973, Atari had 80 employees; in 1982, Atari had 10,000 employees. In 1992, there would be only 450 left of them...and still decreasing!

The arcade division of Atari remained with Time Warner and was named Atari Games. From this time on, there were two separate Ataris...

Years went by with some new releases of home computers like the 65XE, the 130XE, and, of course, the Atari ST, a powerful 32-bit machine. Running the TOS, it offered comparable convenience to the Apple MacOS.

In 1987, Atari released the XE Game System. Based on the 65XE, it offered expandability with a keyboard and all peripherals needed to make it a full home computer. But the technology was rather old...

Subsequently, Atari took over the rights to a hardware product of the well-known software company Epyx, which programmed such successful games as Summer Games, Winter Games, and Impossible Mission. Epyx had developed a portable video-game system with a color display but ran short on money. And so Atari saw the chance to acquire a fully developed system to put on the market in October 1989. The Lynx was born, but sold only in New York and Los Angeles. But Atari was facing even more problems.

It was the world's first handheld system with a color-graphics display. But due to problems with the supplier of the LCDs, there was a shortage of Lynxes, and for that reason, Atari missed the Christmas shopping season: Nintendo's Game Boy ruled the portable video-game market with a black-and-white display...

In March 1990, the Lynx was distributed nationwide in the US, but it failed in the battle between the Game Boy and the Turbo Express.

In 1991, rumors arose that Atari was working on a 32-bit system called the Panther. Atari confirmed the existence, but never showed engineering samples.

Suddenly, Atari announced that all work on the Panther had been stopped. They declared that a more sophisticated 64-bit system was being worked on: the Jaguar.

In October 1993, Atari released the Jaguar for $250, three years before Nintendo's 64-bit console, the N64...

The Jaguar was produced by IBM (later by Comptronix) and marketed with the label 'Made In The US'. It was the only game console to be produced in the USA at that time (and until now)!

In September 1995, Atari released the Jaguar CD for about $150. This hardware add-on (plugged into the cartridge port) was the answer to Sony's 32-bit PlayStation that was about to rule the whole market in the near future.

Atari considered an enhanced version of the Jaguar with integrated CD-ROM and a Jaguar II that would be up to 2-4 times faster than the PlayStation, but the end was near...

On July 30, 1996, Atari Corporation entered a reverse merger with JTS, a small manufacturer of hard-disk drives. Atari was now a subdivision of JTS without any operating business; most of the remaining Atari employees were released.

On February 23rd, 1998, JTS sold all of its Atari assets to Hasbro Interactive Inc. for about $5,000,000 in cash!

On May 14th, 1999, Hasbro released all rights on the Jaguar to the public. The next day, Hasbro announced Atari as their new label for home video games... Since then, there have been some rumors that Hasbro will be developing a new video-game console under the Atari brand in the uncertain future...

On December 6th, 2000, Infogrames purchased 100% of the common stock of Hasbro Interactive and Games.com for $100,000,000 — comprised of $95,000,000 in Infogrames Entertainment SA securities (approximately 4.5 million common shares) and $5,000,000 in cash. According to Infogrames executives, they had really big plans: on May 7th, 2003, Infogrames changed its name to ATARI!

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