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Atari Inc 1972 to 1984Atari was incorporated in the state of California on June 27, 1972, founded by Nolan Bushnell and Ted Dabney, who originally had called their company Syzygy Engineering. Before Atari's official incorporation, Bushnell wrote down several words from the game Go, eventually choosing Atari, a term which in the context of the game means a state where a stone or group of stones is imminently in danger of being taken by one's opponent. The choice of Atari as a brand name was arguably better than Syzygy for most markets in terms of spelling, pronunciation and potential name recognition. Soon they hired Al Alcorn as their first design engineer, which Bushnell decided to have produce, as a test of his abilities, an arcade version of the Magnavox Odyssey's Tennis game, which would be named Pong. Pong quickly became a success and is the first commercially successful video game, which led to the start of the video game industry. Soon after its release, several companies began producing games that copied Pong's gameplay, and eventually released new types of games. In 1973, Atari secretly created a so called "competitor" called Kee Games, headed by Joe Keenan(Nolan's next door neighbor), to circumvent pinball distributors insistence on exclusive distribution deals. So this meant both Atari and Kee could market virtually the same game to different distributors, with each getting an "exclusive" deal. Kee's relationship to Atari was discovered in 1974, but Joe Keenan did such a good job managing Kee that he was promoted to president of Atari that same year. |
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In 1976, Bushnell, through an engineering firm Cyan Engineering, started an effort to produce a video game console that was capable of playing all four of Atari's then-current games. The result was the Atari 2600, sometimes called VCS for Video Computer System. Bushnell knew he had another potential hit on his hands, but bringing the machine to market would be extremely expensive. Looking for outside investors, in 1976 Bushnell sold Atari to Warner Communications for an estimated $28 – $32 million. Nolan continued to have disagreements with Warner Management over the direction of the company, the discontinuing of the pinball division and most importantly, he felt that the Atari 2600 should be discontinued. During a heated argument between Nolan Bushnell and Manny Gerard, Nolan was fired in December 1978. |
Under Warner, Atari Inc. achieved its greatest success, selling millions of 2600s and computers. At its peak, Atari accounted for a third of Warner's annual income and was the fastest-growing company in the history of the United States at the time. A project to design a successor to the 2600 started as soon as the system shipped. The original development team estimated the 2600 had a lifespan of about three years, and decided to build the most powerful machine they could, given that time frame. Atari produced the Atari 400 and 800 computers. Although a variety of issues made them less attractive than the Apple II for some users, the new machines had some success when they finally became available in quantity in 1980. In 1982, the Atari 5200 was released, based on the 400 and 800 computers, but without a keyboard. |
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Atari Inc. ran into problems in the early 1980s. Its home computer, video game console, and arcade divisions operated independently of one another and rarely cooperated. Faced with fierce competition and price wars in the game console and home computer markets, Atari was never able to duplicate the success of the 2600. These problems were followed by the infamous video game crash of 1983, with losses that totaled more than $500 million. Warner's stock price slid from $60 to $20, and the company began searching for a buyer for its troubled division. Negotiating up until close to midnight of July 1, 1984 Jack Tramiel purchased Atari. Warner sold the home computing and game console divisions of Atari to Jack Tramiel for $50 cash and $240 million in promissary notes and stocks, giving Warner a 20% stack in Atari Corporation who then used it to create a new company under the name Atari Corporation. Warner retained the arcade division, continuing it under the name Atari Games, but sold it to Namco in 1985. |