In honor of Atari’s 50th anniversary this week, I present A Brief History of Atari over the next three weeks, be sure to subscribe so you don’t miss anything!

It all started with Nolan Bushnell, who founded Atari on June 27, 1972 after his first company (Syzygy) and first arcade game (Computer Space) failed, probably because of their terrible names. Atari, as most might know these days, is a term from the game “Go” and is roughly equivalent to “check” in chess.

Arcade Games

The first arcade game released by Atari was the infamous Pong, based on the tennis game from the Magnavox Odyssey. Pong became a huge hit and Atari started making more and more arcade games.

Other famous games include:

• Tank

• Breakout

• Asteroids

• Sprint

Pong At Home

To capitalize on the success of Pong in the arcades, Atari started selling Home Pong as a simple device you could attach to your TV to play pong. This proved popular as well, at least for a while.

Atari soon realized it might be worth having a home system with interchangeable games which would help keep people interested longer and would give them another way to monetize their arcade game titles.

Video Computer System

In 1975 work began on what would become the Video Computer System (VCS), a video game console that connected to a TV and let you swap in game program cartridges.

The Atari VCS was designed by Jay Miner and his team using the 6507 CPU, which was a stripped down and less expensive 6502.

The specs for the Atari VCS are insanely primitive. It only had 128 bytes of RAM! It did not have any bit-mapped graphics. All screen output was drawn while the game was running from the cartridge. Called “racing the beam”, programmers had to provide the data to draw things as the electron beam was drawing the image on the TV. Game logic ran in the short periods while the electron gun was not drawing as it moved from the right to left or from the bottom to top.

This is all rather crazy to think about today and was/is incredibly difficult.

Games programs initially were just 4K, but eventually larger games were possible once ROM prices dropped and bank-switching became viable.

During development of the VCS, money was running tight and Bushnell needed investors to complete the project. In 1976 he sold Atari to Warner Communications for about $30 million.

In 1977 the Atari VCS was released at a price of $199 ($959 in 2022). It initially did not sell all that well, and Bushnell ended up leaving Atari in late 1978.

In 1980 with the release of the Space Invaders cartridge sales took off and the video game boom was born. The VCS eventually sold about 30 million units before it was discontinued in 1992!

In 1981, after failing to get recognition for the games they created for Atari, several employees left to form Activision, the first 3rd party video game company. Activision produced many stellar games for the Atari VCS, most notably Pitfall!.

When originally conceived the Atari VCS was expected to have a lifespan of 3 years. It obviously lasted much longer than that, but Atari did began planning for its replacement.

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In 1982 with the introduction of the Atari 5200, the Atari VCS was rebranded as the Atari 2600.

Atari 8-bit Computers

The Atari 8-bit computers started life as the replacement for the Atari VCS and were largely developed by the same team. After development began, the home computer industry was kicked into gear in 1977 with the holy trinity of the Apple II, Commodore PET and Radio Shack TRS-80. Atari wanted in on that action and pivoted their work to create a computer line.

This system would use the 6502 like the ones above and be a full-fledged computer with a powerful OS, programming languages and peripherals.

Announced in 1978, the Atari 400 and Atari 800 computers were released in fall 1979 at a cost of about $1000 for the Atari 800 ($4823 in 2022). Originally the Atari 400 was going to have 4K and the Atari 800 8K (thus their names) but by release RAM prices had dropped enough that the 400 came with 8K and the 800 came with 16K.

Eventually the 400 shipped with 16K and the 800 with 48K.

Compared to the Apple II, PET and TRS-80, the Atari computers were a revelation. They had amazing color graphics with sprites (called player/missiles in Atari-speak), were faster with a 1.8Mhz 6502 CPU and had an innovative device connector called the SIO (Serial IO) that was a precursor to USB. The OS was incredibly well designed for the time.

Unfortunately, by this point the name Atari had become synonymous with video games, something they never could really shake, and their computers always had to deal with that baggage making it difficult for the marketplace to take them seriously.

It also was apparently difficult for Warner and Atari to know how to handle the computer division as we will soon see.

Atari 5200

In 1982 Atari finally decided to release their next generation video game system based on the 8-bit computer line. They called it the Atari 5200. It was a flop.

Although it used the same hardware as the 8-bit computers, game cartridges were not interchangeable. The 5200 also had a strange new analog joystick which was difficult to use with the games of the time. Lastly, the 5200 was not compatible with the 2600 game library. Atari did eventually release an add-on that could play 2600 games, but it was expensive and arrived too late.

The Atari 5200 was discontinued within a year and perhaps sold about a million units.

The Videogame Crash of 1983

By 1982 Atari was one of the fastest growing companies in the US, mostly because the VCS and its games were selling like gangbusters. But dark clouds were looming. Everyone was trying to get in on all that video game money so you had video games being made by lots of companies and many of them were bad.

This glut of bad games culminated with Atari’s own release of the E.T. game. Based on the incredibly popular movie from 1982, Atari rushed the game to market for the 1982 holiday season. The game did not sell well. It was hard to play and really didn’t appeal in the same way the movie had. Atari had millions of unsold cartridges and things started taking a downward turn.

Things got worse for the video game industry throughout 1983 as prices and sales both crashed. Atari started losing money and as quickly as they rose, they started falling.

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1200XL Fiasco

In early 1983, Atari released the first update to their computers, the Atari 1200XL. When the Atari 400/800 were designed, FCC rules were very stringent for anything that was to be used with a television. So the 400/800 were over-engineered with heavy, expensive casing to prevent any RF interference. This was a big problem when home computer prices started dropping in 1981 with the introduction to the Commodore VIC-20 and continuing with the TI 99/4a and Commodore 64. In order to compete on price, Atari was losing money on each sale.

Some might say Atari should not have tried to compete on price, as Apple chose not to. But I don’t think the Atari name would have allowed that.

The Atari 1200XL did not really offer anything new other than a smaller, sleeker case design. It didn’t even have a much lower price, being released at $899 to start. It did have an updated OS but it had compatibly problems with quite a lot of existing software. It also was a flop.

However, due to its short production life, today Atari 1200XL computers can sell for a lot of money on eBay.

In the end, the 1200XL caused sales of the 800 to increase (where prices were falling rapidly). The 1200XL was quickly discontinued after just a few months, hurting Atari far more than it helped.

The New XL Series

Atari regrouped at the summer 1983 CES and announced a newer, less expensive line of XL computers, headlined with the 600XL and 800XL.

The 600XL was a 16K replacement for the Atari 400 and the 800XL a replacement for the Atari 800. The new OS was more compatible with the older one, plus Atari created a Translator Disk for any incompatible software.

Prices were much better as the 800XL was just $299. There were still no big new features, other than 64K and an exposed Parallel Bus Interface (PBI), which was supposed to make these new computers much more expandable, but not much really came of that. The upgrade from 48K in the Atari 800 to 64K in the 800XL was a nice marketing spin and made it match the C64, but that extra RAM was tricky to use because the 6502 could only access 64K total and there was already 16K of OS ROM in the system.

That is why the 800 had 48K RAM max. 48 + 16 = 64. There were non-standard add-on cards that did allow the 800 to use 256K RAM with special software. Eventually standard bank switching techniques allowed for more RAM to be addressed by accessing blocks of it through a 16K window.

Other XL systems were also announced, including a 1400XL (built-in modem) and a 1450XLD which would have had a built-in floppy drive. Those never saw the light of day and in retrospect were not good or innovative ideas.

In fact, I’d say having multiple 8-bit computer models hurt Atari more than it helped. By keeping a 16K model around, it forced most software developers to target 16K systems (rather than the 64K systems) which meant games would not be as advanced as ones on the Commodore 64.

Unfortunately due to production problems these XL computers were in short supply for the 1983 holiday season and the Commodore 64 ate its lunch.

In early 1984, the 600XL and 800XL became widely available and were selling well. But Atari was still losing lots of money, primarily due to the video game crash and the computers were not making up the difference.

Warner Gives Up

In Spring 1984 Warner started to realize that it needed to shed the Atari albatross and started looking for buyers. One was found from a surprising source…

Continue on to A Brief History of Atari, Part 2.