Did you hear anyone say "Goodbye"?
by Donald A. Thomas, Jr. (10/4/96)
It's odd to imagine an institution, which was as big and as powerful
as Atari once was, to have been shut down in recent days. The real
amazement for me is that it was all accomplished without a measurable
flinch from within or outside the gaming industry. I can understand
that gamers wanted to push Pong out the door early in the timeline. I
can appreciate that the classics such as Missile Command and
Asteroids do not push 32-bit and 64-bit systems to any technological
limits. I know all these things intellectually, but the heart cannot
face the truth that the world and the corporate machine known as
Atari could not find an amicable way to coexist.
On Tuesday, July 30, 1996, Atari Corporation took each and every
share of it's company (ATC), wrapped them all in a tight bundle and
presented them to JTS Corporation; a maker and distributor of hard
disk drives. On Wednesday, the shares were traded under the symbol of
JTS. Within a few weeks, the remaining staff of Atari that were not
dismissed or did not resign, moved to JTS' headquarters in San Jose,
California. The three people were assigned to different areas of the
building and all that really remains of the Atari namesake is a Santa
Clara warehouse full of unsold Jaguar and Lynx products.
It was only as long ago as mid '95 that Atari executives and staff
believed things were finally taking a better turn. Wal*Mart had
agreed to place Jaguar game systems in 400 of their Superstores
across the country. Largely based on this promise of new hope and the
opportunities that open when such deals are made, Atari invested
heavily in the product and mechanisms required to serve the Wal*Mart
chain. But the philosophical beliefs of the Atari decision makers
that great products never need advertising or promotions, put the
Wal*Mart deal straight into a tailspin. With money tied up in the
product on shelves as well as the costs to distribute them to get
there, not much was left to saturate any marketplace with
advertising. While parents rushed into stores to get their kids
Saturns or PlayStations, the few that picked up the Jaguar were
chastised by disappointed children on Christmas day.
In an effort to salvage the pending Wal*Mart situation, desperate
attempts to run infomercials across the country were activated. The
programs were professionally produced by experts in the infomercial
industry and designed to permit Atari to run slightly different
offers in different markets. In spite of the relatively low cost of
running infomercials, the cost to produce them and support them is
very high. The results were disappointing. Of the few thousand people
who actually placed orders, many of them returned their purchases
after the Holidays. The kids wanted what they saw on TV during the
day! They wanted what their friends had! They wanted what the
magazines were raving about!
In early 1996, Wal*Mart began returning all remaining inventory of
Jaguar products. After reversing an "advertising allowance" Atari was
obligated to accept, the net benefit Atari realized was an
overflowing warehouse of inventory in semi-crushed boxes and with
firmly affixed price and security tags. Unable to find a retailer
willing to help distribute the numbers required to stay afloat, Atari
virtually discontinued operations and traded any remaining cash to
JTS in exchange for a graceful way to exit the industry's back door.
Now that JTS has "absorbed" Atari, it really doesn't know what to do
with the bulk of machines Atari hoped to sell. It's difficult to
liquidate them. Even at liquidation prices, consumers expect a
minimal level of support which JTS has no means to offer. The
hundreds of calls they receive from consumers that track them down
each week are answered to the best ability of one person. Inquiries
with regard to licensing Atari classic favorites for other
applications such as handheld games are handled by Mr. John Skruch
who was with Atari for over 13 years.
In spite of Nintendo's claim that their newest game system is the
first 64-bit game system on the market, Atari Corporation actually
introduced the first 64-bit system just before Christmas in 1993.
Since Atari couldn't afford to launch the system nationwide, the
system was introduced in the New York and San Francisco markets
first. Beating the 32-bit systems to the punch (Saturn/PlayStation),
Atari enjoyed moderate success with the Jaguar system and managed to
lure shallow promises from third-party companies to support the
system. Unfortunately, programmers grossly underestimated the time
required to develop 64-bit games. The jump from 8-bit and 16-bit was
wider than anticipated. In addition, Atari was already spread thin
monetarily, but were required to finance almost every title that
was in development.
After the initial launch, it took Atari almost a year before an
assortment of games began to hit store shelves. Even then, having
missed the '94 Holiday Season, many of the planned titles were
de-accelerated to minimize problems caused by rushing things too
fast. Consumers were not happy and retailers were equally dismayed.
The few ads that Atari was able to place in magazines were often
stating incorrect release dates because that information changed
almost every day although magazines deadline their issues up to 120
days in advance.
It was in 1983 that Warner Communications handed Jack Tramiel the
reins of Atari. By this time, Atari was often categorized as a
household name, but few households wanted to spend much money on new
software and the systems were lasting forever. No one needed to buy
new ones. That, combined with Warner's obscene spending, amounted to
a *daily loss* of over $2 million. Atari was physically spread all
over the Silicon Valley with personnel and equipment in literally 80
separate buildings; not considering international offices and
manufacturing facilities. Mr. Tramiel took only the home consumer
branch of Atari and forced Warner to deal with the arcade division
separately. Within a few years, Jack took the company public,
introduced an innovative new line of affordable 16-bit computers and
released the 7800 video game system.
To accomplish these miracles for Atari, Jack implemented his
"business is war" policies. While people who publicly quoted his
statement often felt that policy meant being extremely aggressive in
the marketplace, the meaning actually had closer ties to Tramiel's
experience as a concentration camp survivor. Of the 80 buildings in
Sunnyvale, Santa Clara and Milpitas, almost every one of them were
amputated from Atari's body of liabilities. The people, the work, the
heritage, the history were fired or liquidated. Those who survived
were unsympathetically required to fill in the gaps and while most
tried, few actually found a way to be successfully do what a dozen
people before them did. Atop the mountain, Jack pressed with an iron
thumb. All Fed/Ex mailings were required to be pre-approved by one of
a handful of people. "Unsigned" purchase orders went unpaid
regardless of the urgencies that inspired their creation. Employees
found themselves spending valuable time trying to find ways around
the system to accomplish their jobs. Many of them lost their jobs for
bending the rules or never finding a way to make things work. As
horrible as it all sounds, it actually was the only way to protect
Atari as a company and give it a chance to survive as it did and did
Jack's introduction of the 16-bit computer was initially hearty in
the United States but it went extremely well in Europe. Europeans
were not accustomed to "affordable" technology and although the Atari
computers were not IBM compatible, it didn't matter because people
could afford them. Jacks' private laugh was that the computers were
sold at prices much higher in Europe than Americans were willing to
pay. As a result, most of the machines made were being shipped to
European destinations to capture the higher margin. This enraged the
people in the United States that had been Atari loyalists. While
waiting months for stores to take delivery domestically,
international magazines were touting ample supplies. Those in the
know within the U.S. became dismayed. The remainder never knew Atari
was slowly abandoning the value of Atari's name recognition as it
became easier and easier to forget some assuming Atari had long filed
On a technical level, Atari 16-bit computers were designed beyond
their time. For less than $1,000, consumers could enjoy "multimedia"
before the phrase was ever really widely used. The icon-based working
environment proceeded Windows popularity although the essential
attributes of the two environments were very similar. MIDI was
built-in and became an instant hit in the high-end music industry.
Tasks were activated and manipulated with a mouse and the system
accepted industry standard peripherals such as printers, modems and
With all the genius that went into the technology of the machines,
very little of equivalent genius went into the promoting and
marketing the machines. Mr. Tramiel was the founder of Commodore
Business Machines. When he introduced the PET computer in 1977, Jack
discovered he didn't have to call a single publication. Instead they
all flocked to his door demanding an opportunity to see the product.
News magazines. Science Journals. Business newsletters. Newspaper
reporters. They were all there with microphone, camera and pen in
hand. And they kept coming back. Adding a switch, announcing a new 4K
application or signing a new retailer were all big stories the press
wanted to handle.
Today, a new video game announcement may generate a request from any
of the dozens of gaming magazines for a press release, but a lot of
costly work has to be done to assure fair or better coverage.
Editorial people are literally swamped with technical news. Samples
are mailed regularly to their attention. Faxes fly in through the
phone lines and e-mail jams up their hard drives. It takes a lot to
grab their attention.
While Atari retained hopes to be successful with the Jaguar, Atari's
marketing people were fighting established standards in the industry
with severe handicaps. Since cartridges (the Jaguar was/is primarily
a cartridge-based system) were so expensive, editorial people were
required to return them before new ones would be sent. Editorial
people like to assign review projects. So finding cartridges they
sent out was not always easy to do. Additionally, reviewers often
love their work because they get to keep what they write about.
Regardless, the few magazines willing to cover Atari products were
more often turned away because of a lack of programmable cartridges
or any number of other indecisive barriers. In-store signs and
posters were sometimes created, but many retail chains charge
premiums to manufacturers that want to display them. Some direct mail
campaigns were implemented, but Atari often could not afford to keep
those things being advertised on schedule. Therefore, the
advertisements were published and distributed, but the product was
Clearly, Jack's experience with the world beating a path to the door
of a company making a better mousetrap no longer applied. The world
had revolved a few times beneath him and he never noticed. The
tactics used to successfully sell Commodore computers were simply
antiquated notions from the past. Meanwhile, Sony launches the
PlayStation with over $500 million in marketing funds. Today, the
PlayStation is considered the most successful next-generation
gaming machine throughout the world. Sony bought the market.
Tramiel's Atari never learned how to do that. Actually, they never
could afford it anyway.
After the 1990's got underway, Europe as well as the rest of the
world, discovered that IBM-compatible computers were becoming more
powerful and more affordable. The world always did want computers at
home just like in the office and companies like Dell and Gateway
exemplified the industry's trend toward home-based office computers.
As a result, companies like Commodore, Atari and Next couldn't
compete any longer. While the dedicated user base of each of them
felt abandoned by these companies having to leave the computer
market, the inevitable prevailed. Commodore jumped ship, Next changed
business goals completely and Atari invested what they had left in
the Jaguar game system. Even today, Apple is kicking and screaming.
As good as Apple was at creating a huge niche for themselves, they
focused more heavily on education. When kids grow up and get jobs,
they want business machines. IBM was always the business standard.
When one examines the history of Atari, an appreciation can grow for
how many businesses and people were a part of the game over the
years. Chuck E. Cheese Pizza was started by Atari's founder, Mr.
Nolan Bushnell. Apple Computer was born in a garage by ex-Atari
employees. Activision was founded by Ace Atari programmers. The list
goes on and on.
But for some pathetic reason Atari's final days came and went with no
tribute, no fanfare and no dignified farewells. Why? Where did all
the talent go? Where are all the archives? Where are the vaults?
Where are the unpublished games and where are the originals of those
that were? Why has no company stepped forward to adopt the remaining
attributes Atari has to offer? Where are the creditors? What has
happened to all the properties and sites? Where are the databases,
warranty cards, promotional items, notes on meetings, unanswered
mail? Who owns P.O. Box 61657? Who goes to work in Atari's old
offices? Where do consumers have their systems fixed? Who is
publishing new games? Who still sells Atari products? Why are there
still a lot of people talking about Atari on-line?
I'm an ex-Atari employee and proud to have been. I'm still an Atari
devotee and proud to be. To me, these are questions which all deserve
an answer, but who will ask them?
The best people to ask these questions are those who have exposure to
the public. If you believe Atari left us without saying goodbye,
contact Dateline at email@example.com. If you REALLY believe, then
send this article to 10 of your friends in e-mail. AND if YOU REALLY,
REALLY believe, mail a few to newspapers or other news programs. A
letter in your own words would be great!
I'd spend money for a thorough retrospect on Atari. Wouldn't you?
Wouldn't it at least be nice to say "Goodbye"?