Atari

Atari didn’t just make video games—Atari invented the video game industry. Founded by Nolan Bushnell in 1972, the company went from arcade coin-ops to the best-selling console of the early 80s to a cautionary tale about quality control. The name has changed hands many times, but “Atari” remains synonymous with gaming’s origins.

Fast facts

Founded: 1972 by Nolan Bushnell and Ted Dabney — ⚠ Dabney’s own account says they incorporated in Santa Clara; Sunnyvale is the address Atari is usually given.
Pong (1972): the arcade game that proved video games could be a business.
Atari 2600 (1977): the VCS console that brought gaming into living rooms worldwide.
Warner acquisition (1976): sold to Warner Communications for $28 million.
The crash (1983): overproduction and quality failures contributed to the North American video game market collapse.
Split (1984): Warner sold consumer division to Jack Tramiel (ex-Commodore); arcade division became Atari Games.

Nobody chose the name

Atari Connection — Atari’s own magazine — put the question to co-founder Ted Dabney in June 1981, and the answer is stranger than the usual telling.

There were three founders, not two. All three knew each other from Ampex, and the third “didn’t ante up his $100. Only Bushnell and Dabney remained.” They set up shop in Santa Clara and incorporated.

The company was to be called Syzygy. The California Secretary of State refused it — already taken — so Bushnell and Dabney submitted a ranked list of alternatives, all of them terms from the board game Go. Atari was second:

Bushnell and Dabney submitted the list to the Office of the California Secretary of State. A few weeks later, their incorporation papers came back; the Office of the Secretary had selected their second choice, ATARI.

So the most famous name in video games was picked by a clerk in Sacramento, from a list, on a form. The article glosses it for an American readership as having “similar meaning to the chess word ‘check’”.

⚠ Two details here differ from the version usually given, including in this entry’s own fast facts. Dabney says Santa Clara, not Sunnyvale — the two are adjacent and Atari’s later address was Sunnyvale, so this may be incorporation against operation rather than a contradiction. And the third founder is named only as “Bryan” in this account.

The Jay Miner connection

Before the Amiga, Jay Miner designed the heart of the Atari 2600:

TIA chip: the Television Interface Adaptor handled both graphics and sound in a single chip—remarkable engineering for 1977.
Departure: frustrated by Atari’s refusal to let him build a more powerful machine, Miner left to found what became Amiga Corporation.
Bitter irony: Atari nearly acquired Amiga before Commodore swooped in.

The golden age

From 1977 to 1982, Atari dominated:

2600 library: Space Invaders, Asteroids, Missile Command—arcade hits came home.
Licensing deals: third-party developers like Activision (founded by ex-Atari programmers) expanded the library.
Cultural phenomenon: “playing Atari” became synonymous with playing video games.

The crash

By 1982, warning signs were everywhere:

Rushed releases: E.T. the Extra-Terrestrial was developed in five weeks to meet Christmas—it became a symbol of quality failure.
Pac-Man disappointment: the 2600 port looked nothing like the arcade, selling millions but destroying trust.
Overproduction: retailers returned unsold cartridges by the truckload.
Market collapse: the 1983 crash wiped out North American console gaming until Nintendo’s revival.

The takeover, as it was reported

The 1984 split reduces easily to a line. ANALOG Computing — an Atari magazine — carried it in October 1984 as it happened, and the tone is worth preserving:

Just as we went to press with our last issue, we received the news. Warner Communications had sold its loss-plagued Atari division to Jack Tramiel, former head of Commodore. Thus ended months of half-baked speculation and rampant rumors about the fate of Atari, once the fastest growing company in its history. The anxiety and nail-biting of software producers, hardware producers and, most importantly, the readers of this magazine was replaced with… relief? … anticipation?

The same piece names the cause the standard account tends to fold into “the crash”:

Along with Texas Instruments, Commodore’s participation in the bloody price wars of 1982 and 1983 severely damaged Atari.

That is Atari’s own readership being told that the man who had just bought the company was the man whose price war had wrecked it.

The chipset, the loan, and the lawsuit

Atari nearly acquiring Amiga is usually filed as a bitter irony. The mechanism was sharper than that, and Amazing Computing set it out in January 1987:

Atari [funded Amiga in order] to license the Amiga chipset for future products. Amiga people insist the funding was presented as a loan, and that Atari never expected Amiga to be able to pay back the loan, therefore securing the chipset license agreement. At the last moment before the loan due date… Commodore stepped in and bought Amiga, and gave them the money for the loan.

And then the ownership change turned a commercial disappointment into litigation:

At the same time, Warner Communications sold Atari to Jack Tramiel. Amiga and Warner had agreed that Atari had no rights to the chipset, but Tramiel wasn’t obligated to serve Warner’s interests anymore, so he started a lawsuit.

One consequence, recorded in passing: Jay Miner was “on 10 minute call for the trial” and missed a developer conference for it. The designer of the 2600’s TIA spent part of the Amiga’s launch period waiting to be called as a witness against his old employer.

Jackintosh

The Atari ST’s period nickname, and it stuck at launch. Amazing Computing, June 1987:

When the Atari ST first arrived, it earned the nickname “Jackintosh,” after Jack Tramiel of Atari.

ACE’s retrospective on 1984 explains where the resemblance came from — the Macintosh’s “user interface, the mouse and icons, the ease of operation, the inclusion of the larger and more practical 3.5-inch disk drive greatly influenced Atari and Commodore when planning the ST (often dubbed the ‘Jackintosh’ at launch) and Amiga” — while noting that the 128K Mac itself cost £2,500 in Britain, which is why neither company was copying its price.

The rivalry was personal at engineer level. Amazing Computing‘s account of the Amiga Corporation “wake” party lists, among the things ceremonially laid to rest, a hand-lettered “Crashin’ tosh” sign that had been kept beside an Atari ST on display in the Amiga office.

Ahoy adds the commercial edge in September 1985: Tramiel re-entered a Consumer Electronics Show as an exhibitor “at the eleventh hour — Jackintosh and all”, leaving Commodore “nowhere near sufficient time to ready an Amiga presentation”.

The console that the takeover killed

Least remembered and most direct consequence of 1984. Amazing Computing, June 1988:

Atari’s would-be successor to the 2600, the 5200 game system, died a slow and ignominious death amid the roar of bulldozers burying surplus cartridges. The Atari 7800 SuperSystem, which could have been the rage of 1985, instead fell by the wayside during the Tramiel changeover. By the time the 7800 wobbled out of the warehouse two years later, Japan’s Nintendo captured the new generation Atari had ignored.

The 7800 was finished, and hardware capable of competing with the NES sat in a warehouse while the company changed hands. Atari did not lose the next console generation to Nintendo on the merits; it lost it to a change of ownership and two years.

The Tramiel era

When Jack Tramiel bought Atari’s consumer division in 1984:

New direction: focused on computers (Atari ST) rather than consoles.
Atari ST (1985): 16-bit computer that competed with the Amiga, popular in Europe for MIDI music.
Jaguar (1993): failed attempt at 64-bit gaming.
Decline: sold to JTS in 1996; the brand has changed hands multiple times since.

Legacy

Atari proved video games could be an industry, then proved that industries can collapse when quality fails. The lesson—consumers will tolerate only so much cynical product—influenced Nintendo’s strict quality control and resonates today.

The company that started it all