Central Atari Information Network (CAIN)

The Status at CAIN

Oct 26, 1996

Hello friends! As many of you have observed this web page has been idle for quite a long time now. The main reason was due to our "wait and see" approach to Atari the last several months. Now that it appears Atari has been swallowed up by JTS, we are slimming down our Atari coverage and concentrating on other projects. Moreover, now that I finished up my undergraduate work at Ohio University, I am losing a good portion of my disk quota here. Therefore, I am forced to cut down on this web page's size. CAIN will continue to support Atari products on its Special Interest Group on the Cleveland Freenet and will continue to try its best at answering questions on all Atari products. You can contact CAIN at xx004@po.cwru.edu.

Atari can live on, and will live on. Atari Corp may be dead, but the Atari spirit will live on. Telegames is releasing new games for the Jaguar as well as other third parties. Software and hardware is still developed for Atari computers (16 and 8 bit). The userbase will dwindle, but this can only create a tighter-knit support group. I am reminded of a small but dedicated group of Coleco Adam computer users. Remember that computer? Yes, there is still a userbase for such a machine. ...and they still have their annual AdamCon every year. A friend of mine who is an "Adamite" once told me that going to these AdamCons is like going to a large family reunion. With more Atari computers sold than Adams, there is no reason why such a similar "tight-knit" support group cannot form...

In closing, I want to thank everyone who frequented our web site and wrote letters of encouragement to us. We appreciated every last one of them. Below is a commentary from Don Thomas who gives some insight to Atari's exit.

Best Regards,

Mark Leair

P.S. Here's a link to probably the best source of Atari hardware/software and support: Toad Computers

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
very well.

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 for
bankruptcy.

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 diskettes.

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 not available.

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
dateline@nbc.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"?


--Don Thomas
   75300.1267@compuserve.com
   209/239-3898

Permission is granted to freely reprint this article in it's entirety provided
the author is duly credited.