Born as a console, but with the heart of a computer

Game consoles and personal computers are not all that different on the inside. Both use a central processing unit as their main engine (the Apple ][, Commodore 64, and the Atari 400/800 all used the same 6502 CPU that powered the original Nintendo and Sega consoles). Both allow user input (keyboards and mice on computers, joysticks and game pads on consoles) and both output to a graphical display device (either a monitor or a TV). The main difference is in user interaction. Gaming consoles do one thing only—play games—whereas personal computers also allow users to write letters, balance finances and even enter their own customized programs. Computers cost more, but they also do more. It was not too much of a stretch to imagine the new Hi-Toro console being optionally expandable to a full computer.

However, the investors weren't likely to see things that way. They wanted to make money, and at the time the money in video games dwarfed the money in personal computers. Jay and his colleagues agreed that they would design the new piece of hardware to look like a games unit, with the option of expansion into a full computer cleverly hidden.

This was one of those decisions that, in retrospect, seems incredibly prescient. At the time, it was merely practical—the investors wanted a game console, the new company needed Jay Miner, and Jay wanted to design a new computer. This compromise allowed everyone to get what they wanted. But events were transpiring that would make this decision not only beneficial, but necessary for the survival of the company.

The video game crash

The great video game crash of 1983, was, like all great crashes, easy to predict after it had already happened. With sales of home consoles and video games rising exponentially, companies started to think that the potential for earning money was unlimited. Marketing executives at Atari bragged that they could "shit in a box and sell it." And inevitably, that's exactly what happened.

There were too many software companies producing too many games for the Atari VCS and other competing consoles. The quality of games began to suffer, and the technological limitations of the first generation of video game machines were starting to become insurmountable. Clever programming could only take you so far. Today, it is understood that each new generation of game consoles has a limited lifecycle, and new hardware platforms are scheduled for release just as the old ones are starting to wane. Back then, however, the industry was so new that the sinusoidal-like demand for a game platform was not understood at all. People just expected sales to keep going up forever.

Just like the dotcom bubble in the late 1990s, a point was reached where the initial enthusiasm was left behind and replaced with sheer insanity. This point can be traced precisely to the release of a new game for the Atari VCS in late 1982, timed to coincide with the release of a new blockbuster movie: E.T. The Extra Terrestrial.



The game that ended it all.

Atari paid millions of dollars for the license to make the game, but marketing executives demanded that it be developed and sent to manufacturing in six weeks. Good software is like good wine—it cannot be rushed. The game that Atari programmers managed to produce turned out to be a very nasty bottle of vinegar. It was repetitive, frustrating, and not much fun. Atari executives, however, did not realize this. They compounded their mistake by ordering the manufacture of five million cartridges, which was nearly the number of VCS consoles existing at the time. But the insanity didn't stop there. For the release of the game Pac-Man, Atari actually manufactured more cartridges than there were VCS consoles to run them!

An Atari marketing manager was actually asked about this disparity, and his response clearly expressed his total disconnect from reality. He said that people might like to buy two copies: one for home, and one for a vacation cottage!

Instead of two copies, most people decided to buy zero. Atari (and thus Warner) posted huge losses for the year and were forced to write off most of its unsold inventory of VCS cartridges. In a famous ceremony, tens of thousands of E.T., Pac-Man, and other carts were buried and bulldozed in an industrial waste dump.

The E.T. debacle was the exact moment when the bubble burst. Millions of kids around the world decided that Atari and, by extension, all console video games weren't "cool" anymore. Sales of all game systems and software plummeted. Suddenly, venture funding for new game companies vanished.

Personal computer sales, however, were still climbing steadily. Systems like the Apple ][, the Commodore 64, and even the new IBM PC were becoming more popular in the home. Parents could justify paying a little more money for a system that was educational, while the kids rejoiced in the fact that these little computers could also play games.

This set the stage for a fateful meeting. The nervous Hi-Toro investors, watching the video game market crumble before their eyes, anxiously asked Jay Miner if it might be possible to convert the new console into a full-blown personal computer. Imagine their relief as he told them he had been planning this all along!

There was only one problem remaining: the company's name. Someone had done a cursory check and found out that the name Hi-Toro was already owned by a Japanese lawnmower company. Jay wanted his new computer to both friendly and sexy. He suggested "Amiga," the Spanish word for female friend. Perhaps not coincidentally, Amiga would also come before Atari in the phone book! Jay wasn't terribly pleased with the name initially. However, as none of the other employees could think of anything better, the name stuck.

Now everything was in place. The players were set; the game was under way.

The dream was becoming a reality.