But were you thinking, "Now we'll put one of these in every home?"
Not really. It was a situation where the technology was so expensive at that time, and not very reliable. I felt that in the home, you needed to have something much more reliable and at a significantly lower cost. We started out in the arcade business, and that worked fine. The next epiphany, if you would, was when we figured out we could put Pong on a single LSI chip... All of a sudden, we knew we could put one in every home. All of a sudden, we went from a very successful coin-op business to a potential consumer business.
Then the microprocessor got strong enough. Remember, the first games were not computers at all; they were really digital signal generators, if you will. You couldn't run a program fast enough in those days. The microprocessor, the 4-bit 4004, wasn't invented until 1974. Our first game came out in 1970. We were four years before the microprocessor. And the 4004 still wasn't good enough. We had to wait until we got to the 6502 or the 6800 series before there was even a possibility. Even then, they were too slow. We had to develop the Stella chip... which basically did all the screen refresh and other things that have to happen in real time, much faster than a microprocessor running at 300KHz could possibly do.
What precipitated your decision to sell Atari to Warner Communications (in 1976)? Was it just more fun to start a company than run one?
What happened is a growing business consumes capital at prodigious rates. And Wall Street had a hard time distinguishing between the frivolity of our product and the fact that it was a serious business. Raising capital was very, very difficult for us. In order to go into the consumer marketplace, we just needed much deeper pockets, and that's why we decided to sell.
Besides video games, you also came that close to launching the PC business. What gave Apple the edge over the Atari 800?
The big difference was Warner Communications against Steve Jobs. Warner could never win that one. I don't know if I could have, but I wouldn't have made the same mistakes Warner did.
The main problem that allowed Apple to dominate was, in fact, not technology but business strategy. Steve was out evangelizing to software developers to build software for their machines.
Our strategy with the video games was that we basically wanted to give away the hardware and make money on the software. That called for a quasi-closed system. Warner thought that was the right way to do the computers business, too. So they said, "Not only are we not going to help third-party developers, we're going to sue you if you use our operating environment." So everybody that wanted to get into the software business supported Apple over Atari.
So basically Warner drove the coffin nail in the Atari 800, despite it having a clearly superior chipset, a better operating environment... We had a lot of innovations in the Atari 800 that became standard later on.
What would the PC business be like now if the 800 had been given a chance?
I know I wouldn't have made the mistakes Warner did.
Would you have made the mistakes Apple did later on?
I don't know. It's so gratuitous to say, "No, I would have been much smarter." I think that it would have been a good horse race.
Atari was known for being a very fun place to work, which seems to have gone out of the video game industry. Any advice for game developers today?
Atari's strategy was actually quite simple and, I think, quite elegant. We were known as a party place, but the important thing is that parties didn't happen unless quotas were made. We had a lot of parties because people made their numbers... We had a very young work force that was more interested in having a party than making more money, so there was a sound business principle behind the parties.
