Nolan Bushnell played the game "Spacewar" frequently during his electrical engineering/computer science studies in the 1960s. This game was implemented on a PDP-1 machine. Due to his fascination with this game, he wanted to create an arcade machine for it. As an electrical engineer and an employee of Ampex, Nolan Bushnell, along with his colleague Ted Dabney, left Ampex in 1970 to join "Nutting Associates," a company willing to finance the development of their arcade machine idea. There, from 1970 to 1971, Nolan Bushnell and Ted Dabney built the machine named "Computer Space," which, unfortunately, did not achieve commercial success likely due to marketing issues.
In 1972, Nolan Bushnell and Ted Dabney left "Nutting Associates" to start their own company, "ATARI," and released the game "PONG" in the form of an arcade machine. The origins of "PONG" can be traced back to Ralph Baer and the game "Ping Pong" on the Magnavox Odyssey in 1972. Al Alcorn, who joined the company shortly after its founding, was asked by Bushnell to develop a coin-operated version based on "Ping Pong." This machine was named "PONG." It was initially placed in a bar for a trial run. After two weeks, it was reported as "broken," but upon inspection, it turned out that the coin slot was so full that there was no space for more coins. "PONG" became a huge success, making the machine and the name "Pong" famous worldwide.
At one point, Al Alcorn dealt with Steve Jobs, who was 18 years old at the time and sat in the reception area seeking employment. Al Alcorn hired him. In 1976, Steve Jobs, along with Steve Wozniak, developed the electronics for the arcade machine "Breakout" at Atari. However, the board with approximately 44 chips was not adopted for production; instead, Atari created a new version with around 100 chips, citing that the current manufacturing methods made production impossible. This arcade machine became a great success.
As a result of the success of Atari arcade machines, Al Alcorn developed the VCS game console in the 1970s, using the MOS 6507 microprocessor and the TIA graphics chip (Television Interface Adapter) created by Jay Miner. The introduction of the VCS game console was planned for 1977, but the necessary funds were not available. Therefore, in 1976, Nolan Bushnell sold ATARI to Time Warner, which provided additional funding of $100 million.
Thus, in 1977, the VCS game console was publicly unveiled at CES and soon entered the market. Initially, the VCS console was not a huge success, and profits were hard to come by. At that time, Nolan Bushnell, who still served as a consultant at ATARI, suggested selling the VCS console without profit and making money solely from game cartridges. The management did not favor this business model and, after some disagreements, parted ways with Nolan Bushnell.
The turning point and substantial success came at the end of 1978 with the new CEO, Raymond Kassar, who invested heavily in advertising and new games. This led to the first profitable year in 1979. Especially the game "Space Invaders," released for the VCS in 1980, gave Atari VCS a significant boost in sales. Ultimately, the VCS console was sold approximately 30 million times worldwide, with over 500 games developed for it.
Starting in 1980, as home computers became more affordable, the game console market, including the VCS console, faced increasing competition. Gradually, consoles were displaced by home computers, and after substantial losses, Time Warner sold the Atari company to Jack Tramiel in 1984, who had recently left Commodore after a dispute.
The VCS console and the sale of the Atari 800 XL home computer continued to fund Jack Tramiel's push into the 16-bit home computer market with products like the Atari ST 520 and 1040, which gained popularity among musicians and in desktop publishing. However, when PCs dominated the consumer market in the early 1990s, these systems had little chance of survival. Consequently, neither Commodore nor Atari, once leaders in the electronics industry, survived this evolution.