Editing Atari (section)

===Atari Inc. (1972–1984)===
{{Main article|Atari, Inc.}}
{{refimprove section|date=August 2016}}
In 1971, [[Nolan Bushnell]] and Ted Dabney founded an engineering firm, Syzygy Engineering,<ref>{{Cite web|url=http://www.atarimuseum.com/videogames/arcade/arcade70.html|title=Atari Coin-Op/Arcade Systems|website=www.atarimuseum.com|access-date=2016-07-08}}</ref> that designed and built ''[[Computer Space]]'', the world's first arcade video game, for Nutting Associates. On June 27, 1972 Atari, Inc. was incorporated and soon hired [[Al Alcorn]] as their first design engineer. Bushnell decided to have Alcorn produce as a test of his abilities, an arcade version of the [[Magnavox Odyssey]]'s Tennis game,<ref name="nolanmagnavox">{{cite web|author=Ador Yano |url=http://www.ralphbaer.com/video_game_history.htm |title=Video game history |publisher=Ralphbaer.com |date= |accessdate=December 27, 2011}}</ref> which would be named [[Pong]]. While Bushnell incorporated Atari in June 1972, Syzygy Company was never formally incorporated. Before Atari's official incorporation, Bushnell wrote down several words from the game [[Go (board game)|go]], eventually choosing ''[[Atari (go)|atari]]'', a term which in the context of the game means a state where a [[Rules of go#Stones|stone]] or group of stones is imminently in danger of being taken by one's opponent. Atari was incorporated in the state of California on June 27, 1972.<ref name="inc1972">[http://web.archive.org/web/20071016062150/http://kepler.ss.ca.gov/corpdata/ShowAllList?QueryCorpNumber=C0654542 California Secretary of State - California Business Search - Corporation Search Results<!-- Bot generated title -->]</ref>

[[File:Atari-2600-Wood-4Sw-Set.jpg|right|thumb|300px|The third version of the Atari [[Atari 2600|Video Computer System]] sold from 1980 to 1982]]
In 1973, Atari secretly spawned a "competitor" called [[Kee Games]], headed by Nolan's next door neighbor Joe Keenan, to circumvent [[pinball]] distributors' insistence on exclusive distribution deals; both Atari and Kee could market virtually the same game to different distributors, with each getting an "exclusive" deal. Though Kee's relationship to Atari was invented in 1974, Joe Keenan's management of the subsidiary led to him being promoted president of Atari that same year.<ref>{{cite book |last1=Monfort |first1=Nick |last2=Bogost |first2=Ian |title=Racing the Beam |publisher=MIT Press |date=March 31, 2009 |origyear=1st. Pub. 2009|pages=20 |chapter=Chapter 2: Combat |chapterurl=https://books.google.com/books?id=DqePfdz_x6gC&pg=PA20&lpg=PA20&dq=kee+games+competitor&source=bl&ots=FQXopWOqPB&sig=G39U5sf3FRNlXyWr2xV1tS6iroU&hl=en&sa=X&ei=I3mJUtafNurViwLTx4GoDQ&ved=0CFAQ6AEwBQ#v=onepage&q=kee%20games%20competitor&f=false |isbn=978-1-234-56789-7 |lastauthoramp=y}}</ref>

In 1976, Bushnell, through a [[Grass Valley, CA]]. engineering firm—Cyan Engineering, started an effort to produce a flexible video game console that was capable of playing all four of Atari's then-current games. The result was the [[Atari 2600|Atari Video Computer System]], or "VCS" (Later renamed the Atari 2600 when the Atari 5200 was released). The initial release of the VCS cost $199 ({{Inflation|US|199|1976|fmt=eq}}) and included a console unit, two joysticks, a single pair of paddles, and the ''Combat'' cartridge.<ref>{{Cite web|url=https://toytales.ca/atari-2600/|title=Atari 2600 {{!}} Toys with a History {{!}} Toy Tales - Todd Coopee|date=2015-12-28|language=en-US|access-date=2016-07-08}}</ref> Bushnell knew he had another potential hit on his hands, but bringing the machine to market would be extremely expensive. Looking for outside investors, in 1976 Bushnell sold Atari to [[Time-Warner|Warner Communications]] for an estimated $28–32 million, using part of the money to buy the [[Folgers]] Mansion. Nolan continued to have disagreements with Warner Management over the direction of the company, the discontinuing of the Pinball division and most importantly, he felt that the Atari 2600 should be discontinued. In 1978, the Kee Games brand was dropped.<ref>[http://mcurrent.name/atarihistory/atari.html A History of Atari / Atari Games / Atari Holdings<!-- Bot generated title -->]</ref> In December of that year during a heated argument between [[Nolan Bushnell]] and Manny Gerard, Bushnell was fired. "[W]e started fighting like cats and dogs. And then the wheels came off that fall. Warner claimed they fired me," recalled Bushnell. "I say I quit. It was a mutual separation."<ref name="ramsay">{{cite book |last=Ramsay |first=Morgan |year=2012 |title=Gamers at Work: Stories Behind the Games People Play |isbn=978-1430233510}}</ref>

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. Mid-way into 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 8-bit family|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 success when they finally became available in quantity in 1980. In 1982, the [[Atari 5200]] was released, based heavily on the 400 and 800 models, but without a keyboard. The 5200 was unsuccessful, due to a lack of backwards compatibility with the 2600 library, a small amount of games, and notoriously-unreliable controllers.

Under Warner and the Chairman and CEO they chose to run Atari, [[Raymond Kassar]], Atari Inc. 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. However, Atari Inc. ran into problems in the early 1980s as interference from the New York-based Warner management increasingly affected daily operations. Its [[home computer]], [[video game console]], and [[Video arcade|arcade]] divisions operated independently of one another and rarely cooperated. Faced with fierce competition and price wars in the game console and home computer markets, Atari was never able to duplicate the success of the 2600.

These problems were followed by the [[video game crash of 1983]], with losses that totaled more than $500 million. Warner's stock price slid from $60 to $20, and the company began searching for a buyer for its troubled division. In 1983, Ray Kassar was forced to resign, and executives involved in the [[Nintendo Entertainment System|Famicom]] lost track of the negotiations, and the deal eventually died. With Atari's further financial problems and the Famicom's runaway success in Japan after its July 16, 1983 release date, [[Nintendo]] decided to go at it alone.

Financial problems continued to mount and Kassar's successor, [[James J. Morgan]], had less than a year in which to tackle the company's problems, he began a massive restructuring of the company and worked with Warner Communications in May 1984 to create "NATCO" which stood for New Atari Company which would further lean the company facilities, personnel and spending and make the company profit. Unknown to James Morgan and the senior management of Atari, Warner had been in talks with Tramel Technology to buy Atari's Consumer electronics and Home Computer divisions. Negotiating up until close to midnight of July 1, 1984 [[Jack Tramiel]] purchased Atari. Warner sold the home computing and game console divisions of Atari to Tramiel for $50 cash and $240 million in promissory notes and stocks, giving Warner a 20% stake in Atari Corporation<ref name="sale">{{Cite news
 | last = Sanger
 | first = David E.
 | title = Warner Sells Atari To Tramiel
 | newspaper=[[New York Times]]
 | pages = Late City Final Edition, Section D, Page 1, Column 6, 1115 words
 | date = July 3, 1984
 | url = http://www.nytimes.com/1984/07/03/business/warner-sells-atari-to-tramiel.html
 | postscript = <!--None-->}}</ref> who then used it to create a new company under the name '''Atari Corporation'''. Warner retained the arcade division, continuing it under the name [[Atari Games]], but sold it to [[Namco]] in 1985. Warner also sold the fledgling '''Ataritel''' to [[Mitsubishi Electric|Mitsubishi]].