Too Little, Too Late
Atari’s follow-up to the 5200 fares slightly better than its predecessor, at least in terms of lifespan. The entire hardware and software staff at Atari is put behind the new project, originally labeled the 3600, in late 1983 after exhaustive market research is conducted in an attempt to determine exactly what features gamers are looking for in a home machine. Also onboard is Cambridge, MA based General Computer Corporation, who design an advanced graphics chip for the system. Named MARIA, this new piece of hardware can generate 256 colours at once, with a screen resolution of 320×192 pixels. It also figures in a complete revamping of Atari’s signature Player/Missile style of sprite handling, a system essentially used by every Atari console and computer since the VCS/2600 in 1977. As such, the new game unit can handle up to 100 moving objects on-screen at the same time. Having learned a lesson from the much-maligned analog controllers of the 5200, Atari includes regular style Precision Pro-Line joysticks with its sequel. Players do lose something in the bargain, though: system options such as Pause, Start and Select are moved off the controllers, where they had been conveniently placed on the 5200, and onto the front of the new system’s case.
General Computer Corp. also created the Hyperdrive 20, the first hard drive for the
Apple Macintosh computer.
The entire unit, complete with out-of-the-box 2600 compatibility, is introduced as the 7800 ProSystem (2600 + 5200, get it?) by Atari CEO James Morgan at the Summer CES in Chicago in 1984. Morgan and Atari don’t make any friends with owners of and third-party manufacturers of games for the 5200 by adding that production of the previous console will now end, under two years since its release. They do trumpet the good news that the 7800 has the most advanced graphics of any current video game console or home computer system, with an announced retail price of only $150.
The Atari 7800 ProSystem
This low-ball pricing for a flagship Atari product is required to make the system competitive in a market swamped in discounted game consoles. In line with the current mania for home console computer conversion kits, such an add-on is also profiled at CES, but not physically demonstrated there, called the 7800 Computer Keyboard. Developed by GCC, it is to offer 4K RAM, expandable to 20K, and is stated by Atari to be priced under $100. Other hardware peripherals mentioned for the add-on computer include a modem cartridge called Atari Terminal, the AtariLab science kit, and a cartridge for programming the system in BASIC. A program called The Word Processor is also announced, and users will be able to use this and other application software due to the keyboard add-on being compatible with most equipment made for the Atari 8-bit computers, such as printers. Also touted at CES is the ability to save game scores on the 7800 with the announced Hi-Score cartridge. With this plugged into the cartridge slot and another game inserted into the top of it, users are able to keep the score results for up to 65 play sessions.
Click the button to play Asteroids on the 7800. Arrow keys to move, CTRL for fire 1, ALT/OPTION for fire 2
The purchase of the consumer division of Atari by Jack Tramiel in the fall of 1984, however, spells doom for the 7800 and its sundry paraphernalia. Some 7800 units had trickled out onto the market under Morgan, but Tramiel places a freeze on almost all video game projects at Atari and focuses the company more towards the home computer market and their 16-bit ST computer line.
The Atari Entertainment System?
Even though the once-fearsome Atari name is losing its potency, it still has enough power to strike fear in the hearts of Nintendo brass. In 1983, enjoying success with their Famicom videogame unit in Japan, the company approaches Atari with the hopes that they will build and distribute the Famicom in North America. With Atari’s financial troubles mounting and draconian terms to the deal imposed by Nintendo president Hiroshi Yamauchi, the proposed partnership eventually falls through. Nintendo goes it alone, and eventually takes over the home videogame market in North America with the NES.
Game Attempt
Click the button to play the Atari 7800 version of Pole Position II
The Jack Tramiel-led Atari Corp. eventually reintroduces the 7800 at the winter 1986 CES, along with the redesigned, smaller 2600. Included with the 7800 is the cartridge Pole Position II, and there are only three other game titles available for sale at the console’s debut: well-worn arcade hits Asteroids, Joust and Ms. Pac-Man. A library of nearly 60 games eventually builds up for the system during its run, with the 7800 selling over 3.5 million units between 1986 and 1990. However, in a market distrustful of Atari’s past failures and now dominated by product from Nintendo and Sega, Atari has to sell the units for under $80 and even new game releases for it at or under $20, a very low-profit margin indeed compared to the around $35 for new NES releases. In early 1992, along with the old warhorses 2600 and 400/800 computer line, Atari announces the end of production of the 7800. 
Sources (Click to view)
Santa Ana Orange County Register, “New Atari is on the way, but old unit not obsolete”, by Michael Blanchet, pg. D5, Sept. 3, 1982
Syracuse Post-Standard, “Video Players All Wired Up”, by Carol L. Cleaveland, pg. D-1, Dec. 14, 1982
InfoWorld, “News: Atari Intros Advanced Game” by Scott Mace, pg. 13, Jun 11 1984
Hudson, Lou. “2600 + 5200 Adds up to Bad Consumer News.” Fort Worth Star-Telegram 09 June 1984: 3E. Newspapers.com. Web. 17 Sept. 2020. But this may have gone unnoticed in the hype of announcing the 7800 system: The fine print at the bottom of the news stories is that Atari will no longer produce the 5200.
Compute!, “Software Power!: The Summer Consumer Electronics Show” by Selby Bateman, pgs. 32-41, Aug 1984
Gutman, Dan. “Commodore 64: No. 1 in Home Computers.” St. Louis Dispatch 06 June 1984: 4E. Newspapers.com. Web. 30 July 2021. The 7800 Computer Keyboard, which was not demonstrated [at Summer CES]…
Image of the Atari 7800 with labels taken by William Hunter at the Videogame History Museum display, CGE 2014 in Las Vegas
Image of the 7800 keyboard from Electronic Games, “Readers Replay: 7800 Already Gone?”, pg. 18-19, Nov 1984. Retrieved from the Internet Archive, Electronic Games magazine collection
2009 Gamasutra article by Matt Matthews
Atari 7800 Sales Figures (1986 – 1990)
Compute!, “Report From: The Winter Consumer Electronics Show” by Tom R. Halfhill, pgs. 30-41, April 1986
Antic, “Atari’s New Computers” by Jon Bell, pgs. 22 – 24, May 1987
Atari 7800 – Wikipedia
Pole Position II, Asteroids, Joust and Ms. Pac-Man 7800 game boxes from EmuMovies: http://emumovies.com
“Entertainment: Atari 7800.” Family Computing July 1987: 18. Web. 6 May 2023. The other area in which the Atari system [7800] excels is price, with the system unit less than $90 list, and even new titles priced at less than $20, as compared to process up to $35 for the competition.
Referenced Books (Click to view)
Phoenix: The Fall and Rise of Videogames Third Edition, by Leonard Herman
I’m not sure that “pin their hopes” is accurate either. There was genuine hesitation on going with Yamauchi’s very one sided deal. First and foremost was the fact that it was a yet unreleased/unproven console when they approached Atari (they were shown a wirewrap), and the engineers were split on which was the better tech (GCC’s MARIA and it’s larger sprite capacity or Ninteno’s PPU). Likewise, Yamauchi’s deal required Atari to release their Atari branded Famicom world wide by that Christmas ’83 (this was already during the spring ’83), get all the parts from Nintendo from console to cartridge (Atari was just allowed to do their own cases and packaging) and a guaranteed minimum order. So they had some right to their hesitation, and they were looking to stall signing anything until MARIA was further along so they could more properly evaluate the two. Then the Coleco incident happened, then Kassar was let go, and then Morgan came on and froze all new projects. By that time Yamauchi decided Nintendo should go it alone.
It’s funny that so much emphasis would be placed on which had the better graphics chip, both companies having a pissing contest in that regard, when ultimately a game console lives and dies by their games. Sure, the technology inside is the tool the game developers use, but what really counts is what happens in front of the Toys R’ Us shelves: here’s one console with 4 year old arcade game translations, and here’s the other with Super Mario Bros.!
Not Entirely accurate. Yes, the 7800 went to TRU and KB Bargain bins, but it did have a nice lifespan in the USA and abroad with a decent selection of titles (more and better ones available today). Actually over 3 Million were sold and it was a better seller in the USA than the SMS. I had both and feel the SMS was a better system (with better games), but the 7800 had it charms and provided a nice profit cushion for the Tramiel Atari when they needed it them most.
Interesting, thanks for the info. Looks like I need to edit this a bit. 😉