Most people today know Atari as a gaming company that used to be popular in the 70s and 80s but many aren’t aware that Atari released a series of computers from the late 70s to the early 90s and that they went head to head against industry giants such as Apple computers and Commodore. Although Atari’s computers started off strong in the U.S. PC market, the company soon faltered following pricing war battles in the mid-80s and stiff competition from IBM PC compatibles in the late 80s. In this video, we will be revisiting Atari’s little-remembered home computers. This is the story of how a Gaming company took on the computer industry in the 80s PC Wars.

Before Atari launched its first computer in the late 70s it had an opportunity to launch one way soon. In the mid-70s then-Atari employee Steve Jobs floated the idea of developing a ‘family-friendly’ computer that would be suitable for playing games and helping parents with doing taxes. A machine that would ‘feel’ personal. Atari founder & CEO Nolan Bushnell scoffed at the idea. Only two years later, he would see how expensive his mistake was when Commodore, Radioshack & Apple would start the home computer revolution in 1977 with former Atari employee and now Apple co-founder Steve Jobs at the forefront of the computer revolution. In 1978 amidst an internal power struggle, Nolan Bushnell would be forced out of Atari just 2 years after he had sold it to Warner. He was replaced by Ray Kasaar who upon seeing Apple’s success in the early personal computer market, ordered engineers to repurpose a planned upgrade for the legendary VCS and turn it into a home computer system.

At the consumer electronics show of January 1979, Atari unveiled their first ever home computers, the Atari 400 and 800. They were released to the public in the fall of the same year. The machines had custom graphics, sound chips, joystick support, and the ability to play games with cartridges, cassettes, and disks. The word “Atari” at the time was synonymous with the word “video game” yet Atari marketed the two machines as second-generation PCs with enhanced graphics and sound capabilities. The company intended them to crunch budget numbers just as often as they simulated space battles. They wanted consumers to see the new machines as capable of more than just gaming.

After three years on the market, Atari sought to simplify and update its aging Atari 800 and 400 machines, which featured fairly complex and expensive-to-manufacture internal assemblies and very 1970s-looking industrial design. The result of this streamlining was the 1200XL, which featured a new case design, a simpler motherboard, and more RAM. Even though the 1200XL was well-designed it also became known as a highly flawed machine. A new OS introduced frustrating incompatibilities with existing Atari 8-bit software, and the closed case allowed no serious expansion of internal hardware such as RAM and storage hard drives. The 1200XL was a complete flop in the market and was only produced for less than a year before it was quietly discontinued. Sales of the original 800 actually went up after the release of the 1200XL, sending Atari back to the drawing board.

In 1984, Following his resignation from Commodore, Commodore founder Jack Tramiel led a group of investors who bought Atari’s computer division for around $200 million. Atari sold about 700,000 computers in 1984 compared to Commodore's two million. When Tramiel took over Atari, the high-end XL models were canceled. Nearly all research, design, and prototype projects were canceled. Tramiel focused on developing a new Atari machine and recruiting former Commodore engineers to work on it. Tramiel replaced the 8-bit XL series with two new models: the 65XE, with 64KB of RAM, and the 130 XE, with 128KB. Both were compatible with existing Atari 8-bit software. The XE line of computers would be discontinued in the early 90s. Even though XE computers were discontinued in the early 90s, their popularity was sustained by new markets in former socialist countries, where people did not have the spending power for a 16 or 32-bit computer. For example, out of 250,000 XE computers sold in 1989, 70,000 were sold in Poland.

Throughout the 1980s, Atari’s home computers remained moderately popular entry-level home machines, but they never eclipsed Commodore in market share in the U.S. Despite gaining some success with its XE line in Eastern Europe, Atari Corporation stopped selling computers in 1996. Mark an end to the story of how a gaming icon took on the computer industry.