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, Nolan just developed, called 'Pong' (he later admitted, that he has 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 'Fujijama') 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 is no competition available at that time, Nolan and his friend Joe Keenan are founding 'Kee Games' to artificially provide competition for Atari.
In 1974, Atari and Kee Games 'merge' and Joe Keenan becomes President of Atari.
Many famous people joined Atari at that time; among them Steven 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 in 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's 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 & 800, were released. A whole bunch of peripherals were also available.
Nolan Bushnell left Atari in 1978.
Atari forms one third of Warner Communication's total annual income and becomes 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 were the joysticks. Atari used analogue ones instead of the digital ones they invented with the 2600. Noone 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. Noone 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 out-performed 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 keep 25% of the stocks) and inthroned 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 will 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 go by with some new releases of home-computers like the 65XE, the 130XE and, of course, the Atari ST, a powerful 32bit machine. Running the TOS, it offers comparable convenience like the Apple MacOS.
In 1987, Atari releases the XE Game System. Based on the 65XE, it offers expandability by a keyboard and all peripherals needed to make it a full home-computer. But the technology is rather old...
In the following, Atari takes over the rights to a hardware-product of the well-known software-company 'Epyx', which programmed such successful games like 'Summer Games', Winter Games' and 'Impossible Mission'. Epyx had developed a portable video-game system with color-display, but ran short on money. And so Atari saw the chance to aquire 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 is facing even more problems.
It was the world's first hand-held system with color-graphics display. But due to problems with the supplier of the LCD's, there is a shortage of Lynxes and for that reason, Atari misses the Christmas shopping-season: Nintendo's Game Boy rules the portable video-game market with a black & white display...
In March 1990, the Lynx is distributed nationwide in the US, but it fails in the battle between the Game Boy and the Turbo Express.
In 1991, rumors occur that Atari is working on a 32bit-system called the 'Panther'. Atari confirms the existence, but never shows engineering samples.
Suddenly, Atari announces that all work on the 'Panther' has been stopped. They declare, a higher sophisticated 64bit-system is being worked on: the 'Jaguar'.
In October 1993 Atari releases the Jaguar for $250, 3 years before(!) Nintendo's 64bit-console, the N64...
The Jaguar is produced by IBM (later by Comptronix) and marketed with the label 'Made In The US'. It is the only game-console to be produced in the USA at that time (and until now)!
In September 1995 Atari releases the Jaguar CD for about $150. This hardware add-on (plugged into the cartridge-port) is the answer to Sony's 32bit Playstation that is about to rule the whole market in the near future.
Atari thinks of an enhanced version of the Jaguar with integrated CD-ROM and of a 'Jaguar II', that would be up to 2-4 times faster than the 'Playstation', but the end is near...
On July 30, 1996, Atari Corporation enters a 'reverse merger' with 'JTS', a small manufacturer of hard-disk-drives. Atari is now a subdivision of JTS without any operating business, most of the left Atari employees are released.
On Februar 23rd, 1998 JTS sells all of its Atari assets to Hasbro Interactive Inc. for about $5,000,000 in cash!
On May 14th, 1999 Hasbro releases all rights on the 'Jaguar' to the public. The next day, Hasbro announces Atari as their new label for home-video games...since then, there were 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 got really big plans: on May 7th, 2003 Infogrames changes its name to 'ATARI'!

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