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A decade-long attempt to enter PC history: Atari home computers


Atari’s name is almost synonymous with video games and everything ’80s. However, the video game titan made home computers for over a decade. Have history turned a little bit differently, this article might have been written on an Atari-made machine.

It doesn’t take to be a member of a closed group of enthusiasts to be familiar with the Atari brand. Even though the original company behind the names has been mostly dead for around two decades, its legacy lives on.

Sente, henne, atari?

The familiar name entered the world in 1972, when Nolan Bushnell and Ted Dabney, creators of an arcade game ‘Computer Space’, decided to enter what was to become the video game market. Bushnell took the name Atari from his favorite board game ‘Go’. The term roughly means the same as ‘check’ in chess.

According to Scott Cohens’ book Zap! The rise and fall of Atari, Bushnell registered three different company names based on moves in ‘Go’: atari, sente (equivalent to ‘checkmate’), and hanne (used to acknowledge an overtaking move). Atari stuck because it was the first one to get approved.

Companies’ initial performance would have been in line with all three names, however, in 1972, the same year of its inception, Atari Inc. released Allan Alcorn’s game ‘Pong’, the first truly commercially successful video game. Games’ appeal came from a revolutionary multiplayer option.

‘Pong’ was an arcade-based game, which meant that every copy of the game was sold with an arcade machine, making the production a costly endeavor. Cohen notes that even though Atari sold over 8,000 machines instead of the planned 2,500, the company was always in dire straits.

A videogame system "Pong" from Atari. Image by Shutterstock.

Fathers of video games

Worth around $20M, by 1974, Atari had to lay off half its staff to avoid bankruptcy. The company was saved by the successful performance of the game ‘Tank’, selling off a Japanese branch of the company, and a successful merger with Kee Games.

Cash influx allowed the company to focus on development, such as adapting ‘Pong’ to home use. After the console’s success, Bushnell started eyeing an opportunity to refocus the business towards home video games.

To pursue his vision, Bushnell opted to sell Atari to Warner Communications for close to $30M in 1976. Cohen notes that Warner got interested in Atari after the Warners’ CEO Steve Ross saw how absorbed his wife and son were in playing ‘Pong’ with their friends.

“Everybody was losing interest in the digital watch and the pocket calculator, and most of the people we went to wondered why video games would be any different. Warner Communications was the only one with the guts to put over $100 million into the company while everybody else was saying it was another CB radio,” Bushnell told Cohen.

Warner invested $120M to develop Atari Video Computer System (VCS) or Atari 2600 as it was branded from 1982. The key idea behind the VCS was to sell a machine compatible with game cartridges which meant that one device could support several games. The concept was so successful that in the early ’80s, Atari was synonymous with video games.

From a business perspective, machines were not as profitable as game cartridges. Latter were less than $10 to produce yet sold for over $20. By 1980, Atari revenue was around $400M, and Atari made almost 70% of home consoles in the US.

Atari 400 and Atari 800 home computers released in 1979.

Missed opportunity

Few tweaks in the history of computers would have allowed Atari to enter the PC market as early as 1975-1976. It would have likely put the company among top competitors for Commodore, a now-perished-titan of the early PC era.

A couple of then-Atari employees, Steve Jobs and Steve Wozniak, floated the idea of developing a ‘family-friendly’ computer that would be suitable for playing games and help parents with doing taxes and children with homework. A machine that would ‘feel’ personal. Bushnell scoffed.

Only two years later, he will see how expensive his mistake was. Commodore Radioshack and Apple, established by the former Atari duo, put forward personal computers now called the ‘1977 trinity’ to signify their importance to the dawn of the PC era.

Of the three pioneers, only Apple managed to successfully navigate through the treacherous waters of the home computing business.

Ataris’ attempt to enter the PC market coincided with the departure of Bushnell. He was displeased that the company’s management focused too much on developing games and not updating the VCS. In 1979 Bushnell departed to become a successful owner of ‘Chuck E. Cheese pizza’ chain of restaurants.

Atari logo featured in a 1982 motion picture 'Blade Runner'.

Change of plans

According to Jamie Ledino’s book Breakout: How Atari 8-Bit Computers Defined a Generation, after Bushnell’s departure, his replacement, Ray Kasaar, ordered the company engineers to repurpose a planned upgrade for the VCS to a home computer.

Unlike competing machines, Atari PC’s were designed to be compatible with most TV sets. Atari set devices to run on MOS 6502 microprocessor that supported advanced graphic chips developed by Jay Miner, future designer of the Amiga PC series.

“They wanted their computer to be just as good at gaming as consumers would expect from the Atari brand while simultaneously delivering a real computing experience,” Ledino notes.

The operating system for the upcoming PC was developed by future founders of Activision: Larry Kaplan, Alan Miller, Bob Whitehead, and David Crane. Bill Gates was supposed to write a version of BASIC that could fit into 8KB but was fired due to stalling deadlines.

Chuck Peddle was an early tech visionary responsible for the game-changing MOS 65xx series of microprocessors who convinced Commodore to focus on PC’s rather than calculators. Peddle told the Computer History Museum that at the time of its release, Atari machines were superior to Commodore, especially in terms of video capabilities.

Atari 800XE home computer paired with Atari touch tablet. Image by Senad Palic, Unsplash.com.

Atari 400/800/XL

Atari released the first PCs of what was to become its ‘8 bit series’ of computers in 1979 with Atari 400 and Atari 800. 8KB RAM machines (later upgraded to 16KB) were sold with four controllers and were the first to have coprocessor chips. Atari marketed 400’s as a low-end machine and 800’s towards more advanced users.

Since the 400 should have gotten more interest from younger users, it was equipped with a spill-resistant membrane keyboard, eventually dreaded by system owners. The 800 was fitted with a full keyboard, two cartridge slots, and upgradable RAM.

According to data by Jeremy Reimer, Atari PCs fared well upon release, sizing a significant portion of the PC market share and outselling Apple by 2 to 1 in 1979. Sales of Atari home computers peaked in 1982 with over 600,000 machines sold in that year.

In December 1982, Atari released its newest machine, 1200XL, a 64KB computer designed to look completely different than its predecessors. 1200XL, together with 800XL and 600XL, was Ataris’ answer to Commodores’ VIC-20 and 64 computers that came to dominate the PC market.

Ledino notes, however, that by that time, the majority of software developers had their eyes on Apple and Commodore computers, which meant that fewer products were made with Atari in mind. To make matters worse, Commodore owned MOS technologies, a prime supplier of microprocessor chips, which allowed Commodore to undercut competitor prices continuously.

Atari ST series PC.Image by Senad Palic, Unsplash.com.

The crash

1983 was a catastrophic year for Atari. Coupled with unsuccessful Atari-made game releases, the saturated video game market created something akin to a housing bubble crash of ’08. Atari reported $538M in losses by the end of the year even though the company pulled $1.7 billion in operating profit a year prior.

Six months later, after a threefold slump in stock value, Warner announced selling off Ataris’ consumer products division. Somewhat ironically, the buyer was Jack Tramiel, the ousted founder of the Commodore who agreed to take hundreds of millions in debt that Atari accumulated.

Atari Inc. was no more, as Atari Corporation was born in 1984. Under Tramiel, Atari slowly phased out its 8-bit family computer in favor of 16 or 32-bit processors, called Atari ST. S for ‘sixteen’ and T for ‘thirty-two’.

XE was the last line of 8-bit computers by the company, with 65XE and 130XE discontinued in 1991 and 800 XE in 1992. Even though the computers were discontinued in the early 90’s, their popularity was sustained by new markets in former socialist countries, where people did not have the spending power for a 16 or 32-bit computer. For example, out of 250,000 XE series sold in 1989, 70,000 were sold in Poland.

The ST line did not fare any better, being discontinued in 1993, thus ending Ataris’s 14-year long stint in the home computer market. Like many other PC manufacturers, Atari was not equipped to compete with what has become a market of IBM clones based on Microsoft Windows.

Atari Jaguar. Released in 1993, it was the last game console the Atari Corporation released. Image by Pixabay.

End of an era

The Atari Corporation met its end in 1996. After a failed attempt to compete with Sega by releasing a Jaguar console, the company suffered almost $50M losses in 1994. In 1995, Atari attempted to enter the PC gaming market, albeit unsuccessfully.

With no new products scheduled for release and flailing finances, Atari agreed to merge with JTS Inc., a maker of hard disk drives. After that, Atari’s name disappeared. Currently, several corporations have the rights to the Atari logo.

Up until this day, Atari has a cult following with troves of enthusiasts continuing the legacy of the once all-powerful brand. The name has remained on countless memorabilia t-shirts and attempts to create modern nostalgia-based consoles such as Ataribox.

“Perhaps Atari’s most significant contribution is that it paved the way for the personal computer, which is not a fad. If nothing else, video games have prepared the world for the computer age. A computer is, after all, a video game, except it’s smarter,” Cohen notes in his 1984 book.


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