page_title: Atari, Inc.
section_title: As a subsidiary of Warner Communications
hierarchical_section_title: Atari, Inc. / As a subsidiary of Warner Communications
caption_attribution_description: English: The Atari 400, an 8-bit home computer that was released by Atari in 1979.
context_page_description: Atari, Inc. was an American video game developer and home computer company founded in 1972 by Nolan Bushnell and Ted Dabney. Primarily responsible for the formation of the video arcade and modern video game industry, the company was closed and its assets split in 1984 as a direct result of the video game crash of 1983.
context_section_description: Bushnell knew he had another potential hit on his hands, but bringing the machine to market would be extremely expensive. In 1976 Bushnell sold Atari to Warner Communications for $28 million, using part of the money to buy the Folgers Mansion. He departed from the division in 1979.
  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. By the middle of 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 new machines had some level of success when they finally became available in quantity in 1980.
  While part of Warner, Atari 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.
  Although the 2600 had garnered the lion's share of the home video game market, it experienced its first stiff competition in 1980 from Mattel's Intellivision, which featured ads touting its superior graphics capabilities relative to the 2600. Still, the 2600 remained the industry standard-bearer, because of its market superiority, and because of Atari featuring (by far) the greatest variety of game titles available.
  However, Atari ran into problems in the early 1980s. Its home computer, video game console, and arcade divisions operated independently of one another and rarely cooperated. Having grown to exceed the arcade division's sales, the game division viewed computers as a threat, but by 1983 the computer division was losing a price war with Commodore International. The company had a poor reputation in the industry. One dealer told InfoWorld in early 1984 that "It has totally ruined my business ... Atari has ruined all the independents." A non-Atari executive stated:
  There were so many screaming, shouting, threatening dialogues, it's unbelievable that any company in America could conduct itself the way Atari conducted itself. Atari used threats, intimidation and bullying. It's incredible that anything could be accomplished. Many people left Atari. There was incredible belittling and humiliation of people. We'll never do business with them again.
  Stating that "Atari has never made a dime in microcomputers", John J. Anderson wrote in early 1984:
  Many of the people I spoke to at Atari between 1980 and 1983 had little or no idea what the products they were selling were all about, or who if anyone would care. In one case, we were fed mis- and disinformation on a frighteningly regular basis, from a highly-placed someone supposedly in charge of all publicity concerning the computer systems. And chilling as the individual happenstance was, it seems to have been endemic at Atari at the time.
  Because of fierce competition and price wars in the game console and home computer markets, Atari was never able to duplicate the success of the 2600.
  In 1982, Atari released disappointing versions of two very publicized games, Pac-Man and E.T. the Extra-Terrestrial, causing inventory to rise and prices to fall. In 1983, in response to a large number of returned orders from distributors, Atari buried 700,000 unsold game cartridges (partly consisting of those same two titles, Pac-Man and E.T.) in a New Mexico desert landfill.
  Popular games from third-party developers such as Activision, Imagic, and Parker Brothers also hurt Atari, reducing its share of the cartridge-game market from 75% in 1981 to less than 40% in 1982.
  In 1983, Atari CEO Ray Kassar was prosecuted for insider trading related to sales of Atari stock minutes before the disappointing earnings announcement in December 1982. He settled with the Securities and Exchange Commission for $81,875, neither
caption: The Atari 400 was released in 1979
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