thecybermall
In 1972, Nolan Bushnell and Ted Dabney founded an engineering firm, Syzygy Engineering, and soon hired Al Alcorn as their first design engineer. Bushnell decided to have Alcorn produce an arcade version of the Odyssey's Tennis game, which would be named Pong. When they went to incorporate their firm that June, they found Syzygy was already registered in CA. 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. In Japanese, atari is the nominalized form of ataru, meaning "to hit the target" or "to receive something fortuitously". The word 'atari' is used in Japanese when a prediction comes true or when someone wins a lottery. 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. Atari was incorporated in the state of California on June 27th, 1972.
In 1973, Atari secretly spawned a "competitor" called Kee Games, headed by Nolan's next door neighbor Joe Keenan, to circumvent pinball distributors' insistence on exclusive distribution deals; both Atari and Kee could market the same game to different distributors, with each getting an "exclusive" deal. Though Kee's relationship to Atari was discovered in 1974, Joe Keenan did such a good job managing the subsidiary that he was promoted to president.
In 1975, Bushnell started an effort to produce a flexible video game console that was capable of playing all four of Atari's then-current games. The result was the Atari 2600, one of the most successful consoles in history, sometimes called VCS for Video Computer System. Authors on the history of videogames have consistently presented the possibility the 2600 was named after the frequency 2600 hertz used by a blue box to gain control of telephone networks, or "2600: The Hacker Quarterly," which began as a magazine for telephone phreaking. 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, using part of the money to buy the Folgers Mansion. He departed from the division in 1979.
thecybermall
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 3 years, and decided to build the most powerful machine they could, given that time frame. Midway into the effort's time-frame, the home computer revolution was taking off, so the new machines were adapted, with the addition of a keyboard and various inputs, to produce the Atari 800, and its smaller cousin, the 400. Although a variety of issues made them less attractive than the Apple II for some users, the machines had some success when they finally became available in quantity in 1980.
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. However, 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. In 1983, Ray Kassar was forced to leave Atari, and executives involved in the Famicom deal were forced to start over again, and the deal eventually died. With Atari's further financial problems and the Famicom's runaway success in Japan after its July 16th, 1983 release date, Nintendo decided to go it alone.
Financial problems continued to mount and Ray's successor, James J. Morgan, had less than a year in which to tackle his predecessor's problems before he, too, left. In July 1984, Warner sold the home computing and game console divisions of Atari to Jack Tramiel for $240 million in stocks 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. Warner also sold the fledgling Ataritel to Mitsubishi.
