Atari, Inc.

Atari Inc., the world’s first electronic games company, was founded by the American engineer and entrepreneur Nolan Bushnell in 1972. Bushnell was previously employed by the Ampex Corporation, manufacturers of audio and videotape recorders. The name Atari describes a move in the Japanese game “Go.” The company was based in Sunnyvale, California. Bushnell’s first electronic game was Pong, an electronic version of tennis, originally developed as a coin-operated machine for use in bars and amusement arcades. Atari introduced a home version of Pong two years later, but by then, another American company, Magnavox, had launched its Odyssey electronic ball game. While Atari was doing business with its coin-operated games machines, it lacked the capital to compete with the larger companies that were entering the home-entertainment market. Therefore, in 1976, Bushnell decided to sell Atari to Warner Communications, although he continued to work for Atari until 1978.

In 1977, Atari introduced a games console called the Video Computer System (VCS) that took interchangeable game cartridges. By 1979, there were more than twenty VCS games available, including Space Invaders, which had been developed as an arcade game by the Japanese company, Taito. The popularity of the home version of Space Invaders persuaded Atari to develop VCS versions of its own arcade games, which, by 1982, included Asteroids, Battle Zone, Missile Command, and Pac-Man.

Meanwhile, the company had also turned its attention to the growing home-computer market. Steve Jobs, cofounder of Apple, was employed by Atari in 1976 when he and Stephen Wozniak developed the Apple I microcomputer. While Atari rejected an offer to acquire the rights to the Apple I at a time when the market was untested, two years later it introduced the Atari 400 and 800 home computers. The Atari home computers were technically sound and were well supported with peripherals, but their commercial success suffered because of Atari’s divided commitments. By the early 1980s, Atari was facing stiff competition on all fronts. The launch of the IBM PC in 1981 was followed by a savage price war in 1982, as companies such as Commodore and Texas Instruments cut prices in an effort to maintain sales. While other companies were continuously updating their home computers, Atari was tied up in the rather lengthy development of a new line of home computers, the XL series. The introduction of the XL computers in 1983 did little to offset the financial problems caused by the slump in Atari’s games sales.

In 1984, Warner Communications was glad to offload Atari by selling it to Jack Tramiel, who had founded Commodore in 1958. Tramiel streamlined Atari by reducing the workforce and suspending existing projects, and he also developed new products. Atari’s prospects began to look healthier when the launch of the 5200ST home computer was favorably received. The 5200ST was nicknamed the “Jackintosh” because of its similarity to the Apple Macintosh. Aimed at and priced for the home market, the 5200ST’s disadvantage was a limited range of software. To capitalize on the burgeoning range of PC software, Atari launched its first PC-compatible computer, the i8088 PC-1, in 1987. Its other strategy was to compete for Apple’s share of the non-PC business-computer market by developing a more powerful successor to the 5200ST. Like Apple, Atari used Motorola microprocessors. The Atari TT computer, based on the Motorola 68030 chip, was launched in Europe in late 1989, a year before its American launch. Europe, where Apple had a lower market share than in the United States, had proved a more receptive market for the predecessor ST computer. The Atari TT was cheaper than its Apple equivalent but software was again a stumbling block.

Meanwhile, Atari had not entirely given up on the games market, but it was under increasing pressure from the Japanese companies Nintendo and Sega. While Atari was largely relying on its back catalogue of games, Nintendo and Sega were developing new, inventive games. The Atari 7800, 2800Jr., and XEGS games consoles were primitive technologically compared to the Japanese rival systems, but Atari showed that it was still capable of innovation in the games field when it unveiled its Lynx portable games console with a full color LCD display in 1989. However, Nintendo’s cheaper Game Boy, also launched in 1989, was more commercially successful.

With its computer sales stagnating, Atari pinned its hopes on overtaking its Japanese rivals in the games market by developing an advanced console. The Atari Jaguar console, launched in December 1993, was the world’s first 64-bit games console. It featured high quality sound and color rendering. A contract securing IBM manufacture of the hardware and the commitment of numerous software developers to produce games for the Jaguar were promising signs. However, Atari made the fatal mistake of underestimating the time required for software development after the release of the programming code. Consumers lost interest in the superior Jaguar hardware when a suite of games was slow to appear. Atari was unable to recoup sufficient lost ground before the arrival of the Sony PlayStation and Nintendo 64 consoles in 1996.

The commercial failure of the Jaguar was the last straw for Atari. No longer viable as an independent company, it merged with JTS, a disk-drive manufacturer. This proved to be a short-lived reprieve as JTS folded in 1998. The American toys and games company Hasbro purchased the rights to all Atari’s games. This was just one of a series of strategic acquisitions in the 1980s and 1990s that broadened Hasbro’s product range. In 1995, Hasbro had set up an “interactive” division to develop games on CD-ROM for the personal computer and the Sony PlayStation. Old favorite Atari games, such as Centipede and Frogger, are now available in CD-ROM format. In Europe, Atari’s main computer market, computers are still being made to the specifications of Atari’s architecture and operating systems.