Atari Takes on Apple's Macintosh

By Thomas C. Hayes
The New York Times

Las Vegas, Nev. -- January 6, 1985 -- A slimmed-down Atari Corporation this weekend introduced its first of a new line of powerful home computers. The machines, shown at the Winter Consumer Electronics Show here, are similar to Apple Computer Inc.'s Macintosh model, but less than a third of the price.

Unlike the Macintosh, however, which is sold exclusively in computer specialty stores, Atari said it would rely on mass merchandisers such as K Mart, Toys ''R'' Us and Dayton Hudson's Target chain - already marketers of the least-expensive home computers - to sell the more powerful systems.

Analysts consider the strategy one of many risks Atari is taking with the machines, because the sales staff at such discount stores are usually not trained in the complexities of sophisticated computers. Further, Atari's computers will not use the programs designed for the popular Macintosh.

Atari, which has been struggling for six months under new owner Jack Tramiel to rebound from losses in video games of more than $500 million in 1983, marked its appearance at the show with fanfare that included a ribbon-cutting by Nevada's governor, Richard Bryan.

Low-Key Japanese

In contrast, Japanese manufacturers hoping to break into the American home computer market were barely evident, showing models geared for entertainment in an unadorned booth a distant walk from the bustling, main convention floor.

At the summer electronics show in Chicago, several Japanese manufacturers predicted that by this winter's show their long-awaited ''MSX'' computer/home entertainment machines, which use interchangeable software, would be shown in great numbers. But as it turned out, the Japanese showed only MSX models currently selling in Japan; there were none of the models that the Japanese are considering for the American market.

Masao Morita, a product planner for the Sony Corporation and son of Sony's chairman, Akio Morita, said in an interview that the group of 12 Japanese and Korean companies was still testing their varied approaches to the American market. He said that at least one of the companies, which also include Pioneer, Canon, Sanyo, and Matsushita, would have a model ready for order by next June.

Many industry analysts and software executives said they doubted the Japanese effort would succeed, mainly because it is built around an eight-bit microprocessor, with one- fourth the capacity of new chips already in use. The experts were more upbeat, however, about Atari.

''The word around the show is that Tramiel is getting things straightened out'' at Atari, said John Rosen, marketing vice president at CBS Software, a unit of CBS Inc.

Mr. Tramiel acquired loss-plauged Atari from Warner Communications Inc. last July, six months after being forced out as president of Atari's main competitor in the low-priced, home computer business, Commodore International Ltd.

Commodore is expected to introduce the high-performance Amiga, priced under $1,000, by late spring. Raimund J. Wasner, an analyst with the Yankee Group in Boston, said it would be Commodore's answer to the Macintosh and the new Atari line.

The Commodore 128

For the moment, Commodore as exhibiting only an upgraded version of its Commodore 64, a model with 128,000 characters of memory, called the Commodore 128. Its booth was mostly deserted on Saturday, compared with the crowds at Atari's.

Mr. Tramiel is trying to shed the old Atari game-maker image with the new 130 ST, 260 ST and 520 ST. Industry executives were quick to nickname the ST line after its creator, calling it the ''Jackintosh.''

The models, which are not yet in production, are priced at $399, $499 and $599. The model numbers refer to the amount of memory, with 128,000 charcters in the 130 ST, and up to 528,000 characters in the 530 ST.

The computers are built around the same microprocessor, the Motorola 68000, that runs Apple's Macintosh. The chip processes up to 32 pieces of information simultaneously, making it four times as fast as the Apple II series and the existing Commodore 64 and Atari 800 XL models.

A built-in software program, designed jointly by engineers at Atari and Digital Research Inc., copies most of the features that many analysts said made Macintosh easy to use, such as symbols and pull-down ''windows.'' A similar system, known as Gem and developed by Digital, is available on the International Business Machines Corporation's PCjr. The PCjr sells for less than $1,000.

One factor that could slow acceptance for Atari's new machines is the fact that little software will be available for it intially because it is incompatible with the Macintosh.

Nevertheless, executives at some companies making popular educational and game programs said versions of some of their best-selling programs could be developed quickly.

It was unclear, however, how fast makers of popular, but more complex, business programs, such as Lotus Development Corporation's 1-2- 3 and Ashton-Tate's d-base series, could convert programs for the Atari.

Aiming at Apple

Atari clearly is hoping to lure orders away from Apple with its pricing strategy. A 130 ST, for instance, with a disk drive and low-cost color monitor, would be available for about $800, compared with about $1,800 for a Macintosh with 128,000 characters of memory and a disk drive. The Macintosh, with a built-in monitor, is available only in black and white.

''We can make money because we have low overhead,' said Sam Tramiel, Atari's president and the son of its owner. He said Atari expects to sell a million new ST's in 1985, following the April introduction. He argued that consumers would be willing to buy the Atari systems in stores such as K Mart because ''we're selling to young people who know computers.''

The younger Mr. Tramiel brushed aside concerns of some suppliers and potential investors that Atari does not have the cash to make all of the new machines. ''We brought $75 million of our own money into Atari,'' he said. ''We're financially very sound.''

Atari's new products also included improvements for the 800 XL series. It competes directly against the Commodore 64, which has sold 3.5 million units since its introduction in 1982. The Atari products, called the 65 XE and 130 XE, can operate the hundreds of programs available for the 800 XL. They are priced at $120 and $140.