With the Tramiels restructuring the new Atari, top of their agenda was to re-launch the 8-bit line of Atari systems to compete with Commodores extremely popular Vic-20 and C64 models, and raise much need cash for R&D projects.  It meant tweaking the existing XL line of systems and ensuring they were manufactured as cost effectively as possible.

In the UK at the time, the popular Spectrum series from Sinclair, which was soon to be purchased by Amstrad (Alan Michael Sugar Trading), was head to head with the Commodore systems and the BBC Micro (which was built by Acorn) being successfully pushed into the educational segment.  Other home computers competing for shelf space in the early to mid eighties were the Dragon 32 and 64, the Lynx from Spectravision, the Sword M-5, the Memotech MTX-500, the Sharp MZ-711, the Oric-1, the Texas TI-99/4A and from Japan the MSX series.   It was a tricky proposition to stand tall in such a crowded market place..

Atari Launched the 65XE (64Kb Ram - less exp. bus) and the 130XE (128Kb Ram) in 1985.  A wide range of peripherals were advertised, most of them actually made it to market - a trade mark of the Tramiel run Atari was announcing products which either (a) never saw the light of day or (b) usually came to market much later.

The XE was a continuation of the Warner XL line of 8-bit systems, with re-styled casing and cost-effective components, ensuring competitive price points.  The XE line also comprised of the XEGS, which was part computer and part games console.  It had a detachable keyboard (the only one of it's type on the 8-bit range) and enabled Atari to sell the system in two different retail packages and market segments.

After 1984, and the ugliness of the great console crash, 1985 brought with it some interesting developments in the industry.  Sales of IBM's "PC" line were increasing (only to see it collapse in 1986 and 1987 to competitors) and Apple were on the crest of a wave with their latest computer called simply the "Mac".  Commodore was having internal difficulties, especially at board room level, and it was a dispute which would see Jack Tramiel leave the company he founded many years before (1958).

Jack Tramiel is a business case all to himself - a survivor of the concentration camps at Lodz, Poland - he entered the U.S. in 1947 and became a U.S. citizen.  His philosophy "business is war" has earned him some harsh critics, and although he was influential in making Atari a profitable organisation once again, he is also cited with bringing the electronics pioneer to it's knees.  But let's talk about the positive sides to the Tramiels business acumen - After leaving Commodore (then facing financial ruin also), he started TTL (Tramiel Technology Ltd.).  This was a transition year for Jack and his business partners; Jack was looking around for a company he could "slot" into and market a new line of computer systems - thus, hearing the vibes coming from Warner in 1984, Jack was able to purchase Atari in July of 1984.

The Tramiels, as we have already mentioned, made huge changes to the ex-Warner owned company.  Jack and his team, many ex-commodore, went about "streamlining", cutting whole departments and cancelling projects - even projects at completion stages.  Such casualties were the XL and the VCS 5200/7800* line.  Existing projects, such as the 8-bit computer line, were enhanced and repackaged - Jacks team ensuring that any new systems were built as cost-effectively as possible. *(The 7800 would eventually be re-launched from it's moth-balled state by Atari in 1986).

The new Atari were working towards the launch of a new computer - based around the Amiga chipset.  Amiga Inc. were desperate for a buyer at the time, and the "Warner owned" Atari had paid Amiga Inc. for development work, which Amiga Inc. still had in it's possession.  The Tramiels, having also sunk $500,000 into Amiga, weren't paying any more cash and Amiga needed a buyer. 

Right under the noses of Atari, and at the 11th hour for Amiga Inc, Jack's old company purchased Amiga Inc. lock, stock, and barrel.  Jack was furious, and the court case lasted for years to come.   But Atari had to go back to the drawing board and design the "building blocks" for a new computer as quickly as possible, before Commodore released an Amiga based system and stole the limelight from Atari.

The system, designed and built in record time - was the Atari 130ST.   Atari announced the 130ST, 260ST and 520ST.  The 130ST and 260ST were shelved as memory prices dropped and a decision was made to launch with 512k memory.  The 520ST (Sixteen/Thirty Two - not "Sam Tramiel") was officially launched in 1985 - People were genuinely amazed at the new system - it was more advanced than an Apple Mac, and much more cost effective than the PC.  Dubbed the "Jackintosh" because of it's high-resolution mono-screen option, the system soon became headline computer news world-wide.

The 520ST was launched in 1985 - it was a revolution in home computing.  Although hastily brought to market, in it's 7 year history it sold well in excess of ~2 million units world-wide, most of these went into the European market where the machine was better supported.  At it's launch, it had an external 3.5" single sided, double density disk drive, mono and colour screen options (a TV RF was built into configurations in 1986, with the STF systems) and the STM1 mouse.  interestingly, since it's inception, the Atari mouse never changed shape once!

The 520STFM was heavily advertised in Europe.  Atari really took the lead from Commodore with it's software bundles - from games, educational and music bundles, these helped sales during Christmas and the quieter summer periods. 

While Commodore were making moves to become the worlds number one manufacturer of PC compatible systems, Atari too saw potential to earn some extra revenue in this expanding market segment.