Welcome to VintageAtari.com
Humble Beginnings
Atari made video gaming popular and a household name in the late 1970s and early 1980s. While Ralph Baer was the pioneer in the video game field, it was Atari that captured the market. While Atari?s first console did not have the best graphics, it had the best games, and more importantly, it captured people?s imagination.
In 1972, Atari was founded by Nolan Bushnell and Ted Dabney. However, the idea that sparked the Bushnell came in 1966 when he saw the game Spacewar played on a campus mainframe. Bushnell then sought the help of Ted Dabney to develop a prototype for a home game console.
Their first console was actually a single-purpose game device called PONG, which became a runaway hit. Pong consisted of a white bouncing ball that moved from one side of the screen to the other in much the same way as table tennis.
The Atari 2600
First generation consoles came with a limited number of games already programmed into the game console. These games were activated by plugging in a cartridge that were merely circuit boards with jumpers used to access the games. The Atari 2600 was a significant improvement over the first-generation game consoles.
In 1976, MOS Technologies introduced the 6502 microprocessor. This chip had a significant impact of the game console market and enabled the introduction of low-cost home computers. The 6502 became the heart of most of Commodore, Apple and Atari early computers.
The 6502 also became the powerhouse behind their highly popular game console, the Atari 2600. However, Bushnell sold the company to Warner Communications in order to raise the money required to develop the console. He was able to get US$28 million and retired from the game console division in 1979. It was not until Jack Tramiel took over that Atari in 1985 that the company had a leader with vision and purpose.
Activision Split
Atari's early success is largely attributed to the talented developers. However, the company did not give its developers any credit, nor did they give out any bonus compensation for developing top selling games. As a result, four of Atari?s top game developers left to form Activision with former music industry executive Jim Levy.
At the time of their departure, over half the games sold by Atari were developed by these four developers. Atari tried sue Activision for breach of contract but lost, which resulted in a multitude of game companies starting up to develop games for the Atari 2600. The result was a reduced selling price of each game that slowed revenue for Atari.
While Atari ran into trouble with money losing games like ET, Activision introduced several top selling games like Pitfall. Activision continues to enjoy success today being one of the top game development houses with a market capitalization of US$1.4 billion.
8-bit Computers
Shortly after the release of the Atari 2600, Atari started home computer division centred around the 8-bit MOS 6502 microprocessor. The result of this new division was the introduction of the Atari 400 and 800 in late 1978.
These computers was built on Atari 2600 foundation with several design issues resolved and the ability to expand the computers with memory cards, floppy drives, cassette players, modems and even 80-column displays. The Atari 400 and 800 computers also offered improved graphics and faster overall throughput. In fact, they both offered 128 colours, which was significantly more than Atari?s main competitors.
The Atari 400 sold very well in North America while the Atari 800 sold very well in Europe. However, subsequent models did not fair as well. Atari did not make any significant improvements in their design, still using the 6502 as the main processor.
While the Atari 400 and 800 computers were well made, the 8-bit computer market was soon flooded with computers from Sinclair, Texas Instruments, Apple, Coleco and Commodore with most of these machines having the MOS 6502 as the main processor.
Price War with Commodore
Commodore was a top selling calculator maker in the 1970s until Texas Instruments tried to force Commodore out of the market by selling their calculators at a lower price than Commodore could buy the parts from TI. As a result, Commodore bought MOS Technologies in 1976 to have complete control of the manufacturing pipeline.
By 1983, the same time that Atari was beginning to have trouble, Commodore started a price war with Texas Instruments, which effected the entire 8-bit computer market. The price war lead to many companies exiting the market or filing for bankruptcy. As a result, Commodore captured significant market share in the 8-bit processor market and ended up selling more than 22 million Commodore 64s, the most ever for any computer.
However, the price war resulted in Atari losing millions a day with no new products capable to gaining back market share. Moreover, Atari?s three divisions never properly communicated with each other.
Jack Tramiel
While Commodore survived the computer price war, it lead to disagreement over how Commodore should conduct business. The result was the resignation of Jack Tramiel, the company's founder.
On July 3, 1984, after some time off, Tramiel bought Atari from Warner Communications. His first act was to cancel all projects for assessment with the Atari 5200 being cancelled completely. All remaining products that weren?t cancelled had their prices slashed.
Tramiel believe that computers should be built for the masses. He also believed that business was war and often conducted business as though he was planning for war. He set about resurrecting Atari with a new goal to produce the next generation home computer and bring Atari back to profitability.
The Atari ST
After purchasing Atari, Tramiel soon discovered details of an agreement made with a company called Amiga. Seeing that Atari was in trouble with project capable of becoming the next generation computer, Tramiel set his attention to Amiga.
Seeing that Amiga was in trouble, Tramiel tried to force the company into a position where he could get the company for a fraction of their cost. Atari loaned Amiga enough money for a month. Should Amiga fail to return the money at the end of the month, Atari would get all rights for a very small amount.
However, Commodore also saw the Amiga as an opportunity to save millions on development as they too did not have a successor to the Commodore 64. With days until Amiga had to pay back Atari, they delivered a cheque to Atari in full payment.
Tramiel was furious and was determined to beat Commodore to market with the soon to be named Atari ST. However, they had to build the computer with off the shelf parts. While Commodore?s Amiga would be superior in terms of its processing capabilities and multimedia, the Atari ST was half the price and sold twice as many units until the Commodore-Amiga 500 was released.
The Atari ST line was very popular in Europe in the home as well as business niches like desktop publishing and music.
End of Atari
Atari was the first video game leader. Atari was the company to beat. However, like many early pioneers, Atari suffered from poor management after Bushnell sold the company in 1979.
While the company recovered somewhat with the leadership of Jack Trameil in 1985, the company had lost is edge in the video game market. Atari ended their home computer division in 1992 and focused with a renewed focus on their roots. However, it was too late. While Atari was acclaimed at producing a good console in the Jaguar, they had lost their edge. The restrictive contracts they had set up with game producers no longer existed. Atari was competing against Sega and Nintendo, which had many very successful game franchises. The Jagura was Atari?s last attempt to recapture the video game market.
In 1996, Atari merged with the rather new hard drive maker, JTS. Then only two years later, Atari was sold to Hasbro for a mere US$5 million.
In December 2000, Atari was sold once again to Infogames. In the years since 2000, Atari has been passed around to several companies where the division has yet to produce any remarkable financial results.
While Atari still exists today, it is in name only.
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