Flash forward to 1984, Warner had just sold Atari to Tramiel Technologies, Jack Tramiel, former president of Commodore Business Machines was looking towards the future, So with his new Atari ST line of computers he was ready to take on the computing world. But, what about the 8-bit machines that so many people still had and loved? Well, Tramiel thought of that too. He instantly cut prices on all of the XL line, and then had the engineers redesign the 8-bit line. What came out of that? The Atari XE line of computers. Cost reduction and in a spiffy ST style case. The 65XE was how Atari was going to finish off the 8-bit war. but whoa! Commodore wasn't done yet! Tramiels own Commodore 64 was still selling big, and not only that, the Commodore 128 was soon to be arriving, Not wanting to have Atari behind, the 130XE was created with the 128kb of RAM to compete the C128.
A little bit after the N ES came out, (after Atari refusing to sell it under their name), Atari had another trick and decided to sell an 8-bit computer as a Video Game console this was done and the XE game machine was born. Soon after, December 31st 1989 the 8-bit line was totally discontinued and atari push forward with the 16/32 bit line.

The Atari XE line came with the very much liked FREDDIE memory management chip. This chip allowed more than the max RAM a 65XX processor could handle