by Arthur Leyenberger
by Arthur Leyenberger
Atari has been fairly quiet during the first four months of 1984. In January, at the Winter Consumer Electronics show in Las Vegas, Chairman of the Board and Chief Executive Officer James Morgan stated that Atari would no longer announce products before they were ready to be delivered. This would not only give the beleaguered company time to sort out their financial and operational problems, but also would be the first step in making the company appear as a reliable and credible entertainment electronics company.
During these intervening months, we have all watched Morgan's efforts to reduce overhead by manufacturing products in Taiwan, laying off hundreds of both blue and white collar workers and eliminating unprofitable operations such as APX and Alan Kay's research division. Many of us have wondered whether these were wise moves, playing Monday morning quarterbacks with Atari's future.
At the same time, the XL line of computers, primarily the 800XL, has quietly been selling well and has helped Atari regain a prominent position in the home computer market. In 1983, Atari hardware sales accounted for only four percent of the low end computer market. As of April, 1984, Atari now commands twenty-five percent of that market. The reports of Atari's death were premature.
Aside from the 800XL computers selling better than even Atari's prediction and the availability of the Atari Touch Tablet, there was no news coming out of Sunnyvale. Then, in early May, Atari officially announced the venture with Lucasfilm to produce state-of-the-art entertainment software for their computers and 5200 video game. The two games, Ballblazer and Rescue on Fractalus, have been well received by the press, but will not be available until July. As the approaching Summer Consumer Electronics Show loomed closer, rumors of 1450XLDs, expansion boxes and high end graphics computers began to circulate.
When Atari announced that there would be a press conference on Monday, May 21 in New York City, expectations of both consumers and the industry rose in anticipation of what fabulous piece of hardware would be announced. The result was the introduction of the $150 Atari 7800 ProSystem Video Game.
The 7800 ProSystem is an advanced video game that boasts having the best color graphics of any computer or video game currently available. This is made possible by means of a custom designed semiconductor chip that Atari produced in-house. The graphics chip was designed by video game programmers and goes beyond the capabilities of the familiar ANTIC chip found in the computers. Not only does the 7800 offer better color and graphics than other systems, but the number of video objects that can appear on the screen at one time has been increased to 100. Also, the size and the shape of the objects that appear on the screen can be manipulated more, and the color is more saturated.
The 7800 is styled much like the 5200 but smaller. Two totally redesigned joysticks come with the system. The controllers, smaller and narrower than earlier models, have a self-centering stick and fire buttons located on either side, to accommodate both left- and right-handed players. These ProLine controllers will also work with other Atari products. In addition to playing advanced video cartridges made just for it, the 7800 will also play (without an adapter) the nearly 400 titles already designed for the 2600 game. Moreover, there will be a special adapter for the 5200 system that will allow it to play the 7800 and 2600 game cartridges.
Two other features make the 7800 an interesting piece of hardware. One is the expansion interface which will allow "future video game technologies" to be used with the system. Atari would not be specific as to what "future technologies" really means. However, the other feature is more understandable. By means of an optional full-stroke keyboard, the 7800 may be turned into an "introductory" home computer. A maximum of 20K of memory and full compatibility with all current Atari computer peripherals (via a serial I/O connector) rounds out the system. However, existing computer software will not run on the 7800. The keyboard is expected to retail for less than $100, and it together with software is to become available during the fourth quarter of 1984.
There will be thirteen games for the 7800 when it becomes available in July. These games will retail for about $30 and will fall into three categories. In the "exciting originals" category are the two Lucasfilm games mentioned previously and Desert Falcon (a diagonal-scrolling shoot-em-up). The "exclusive arcade hits" group consists of Pole Position II, Food Fight, Galaga, Xevious and Ms. Pac-Man. Finally, the "arcade classics with enhanced graphics" titles include Robotron 2084, Dig Dug, Joust, Centipede and 3-D Asteroids. Initially, a Pole Position II cartridge will be packed with every system, but, after September, the game will be built into the 7800. There will also be a high-score cartridge that will provide players with the ability to record, update and review the top six scores in up to 65 ProSystem games.
All of the games except the Lucasfilm titles were shown at the press conference, and most lived up to the boast of having the best graphics of any current computer or video game on the market. Five minutes or less i's usually not enough time to judge the quality and playability of a video game, but, in this brief time, Desert Falcon, Pole Position II, Robotron 2084 and Centipede all showed themselves to be excellent games, both in terms of graphics and playability.
![[Pole Position II screenshot]](pictures/pole_position2.jpg)
Technically, the 7800 ProSystem appears to be a quality state-of-the-art video game machine. But there are some tough questions that need to be asked, and finding the answers may help in understanding Atari's future direction, and their success.
Is a new video game machine what consumers want right now? Atari thinks so. They believe that the video game business is very much alive and is just like any other consumer entertainment business, such as the record or movie industry. Business cycles and creativity fluctuate in a cyclical fashion. The introduction of the Atari 7800 is not just a marketing whim but, rather, is part of a "well-planned strategy" of a series of new products that extends through the end of 1985. Atari cites that, during the first four months of 1984, 20 million game cartridges were sold -- and over half were purchased at full retail.
Atari commissioned a market research study to find out what consumers want and what they would pay for in a video game system. They found that game-playing consumers want outstanding software, meaning a wide variety of game cartridges and arcadequality graphics. Consumers also want to have the capability to expand to future "game technologies" as they become available. Of the people who were shown the 7800 system, approximately forty percent said they would buy it. In addition, Atari expects that about half of the 7800 purchasers will be 2600 owners trading up.
Does Atari need the 7800 right now? Yes. Atari, by their own account, says they now have about seventy-five percent of the video game market ... and they realize that their share would slip if they were to sit back and do nothing. The 5200 is no longer in production, and the VCS is old technology. Therefore, Atari needs a new product to remain in the video game business and they are betting heavily on the 7800.
Will the Atari 7800 ProSystem be successful? I think so. There are almost 15 million 2600 game machines and 90 million VCS-type cartridges. That is a huge base of users. Atari wisely made the 7800 system compatible with the 2600 cartridges and, therefore, will reap the benefits of VCS owners trading up for a late-model, sophisticated game-player. The 7800 is the game machine that should have been introduced instead of the 5200. James Morgan has clearly stated that Atari wants to be in the entertainment, education and leisure-time activity business, and he believes that maximizing profits and minizing risks will help achieve Atari's goals.
Will the 7800 system compete with the XL line of computers? Atari believes that there are two viable markets: home computers and video games. Supplying both hardware and software to these markets is what Atari wants to do -- and will do, according to Morgan. It is true that the 600XL computer is not selling very well. Given an almost identical price, it would seem that there would be competition between the 7800s and the XLs. But Atari maintains that there are two distinct markets, and that one does not influence the other. Regardless of what Morgan says, it would not be surprising to find the 600XL computer discontinued by the end of the year, and the 7800/keyboard computer becoming Atari's entry at that level. So, in a way, the 7800 may drive the 600XL off the market.
The "introductory computer," as Atari calls it, does not seem to be a strong aspect of the 7800 system. As Morgan stated, "the keyboard is not a major part of the Atari line. It is there for those people who want it. But it is important to make sure the consumer understands that, with the addition of the keyboard, they are not getting a full-powered computer." Atari and others have announced keyboard add-ons before, and few have been able to deliver. Even if Atari can deliver the keyboard at $100, with the $150 for the 7800 itself, the amount spent is close enough to warrant the buyer getting an 800XL. If there really are two separate markets, then the keyboard computer may be successful. Most of the industry, though, feels that there is only one computer/video game marketplace, and, if that holds true, Atari's 7800 will not succeed.
A final concern relates to Atari's stated intention not to announce products unless they can be delivered. The 7800 will not ship until July, meaning that it will be August before we see it in the stores. The keyboard and 5200 adapter will not be available until the fourth quarter. We are talking about a range of two to six months for product availability. That hardly seems to fit in with the stated policy and will not improve the consumer's perception of Atari's integrity.
To summarize, I see the announcement of the 7800 ProSystem as a positive step for Atari. If it can help to regain the video game market share that Atari has lost over the last couple of years, then Atari will be better off. If Atari is financially healthier, they can put more thought into the design of their computer products which will mean new and better equipment for the Atari user.