Old email's archive (2)

* Originally from Area 'A.ATARI'
* Originally from Dave Lee on 51:5/6, 12 Oct 96 22:43:00
* Originally to All
* Forwarded by Terry May on 1:209/745, 15 Oct 96 11:06:20


The following message is from Ex-employee Don Thomas of Atari
(he's now working for Sony with the PlayStation). It's an
interesting message. If you haven't seen it yet, capture it
and read it. It's thought provoking. Be warned though - this
is a *LONG* post, so capture it!!
<300 lines so it is in two 150 line posts>
-!-


Did you hear anyone say "Goodbye" ?
===================================
by Donald A. Thomas, Jr. (96.10.04)


It's odd to imagine an institution, which was as big and as
powerful as Atari once was, to have been shut down in recent
days. The real amazement for me is that it was all accomplished
without a measurable flinch from within or outside the gaming
industry. I can understand that gamers wanted to push Pong out
the door early in the timeline. I can appreciate that the
classics such as Missile Command and Asteroids do not push
32-bit and 64-bit systems to any technological limits. I know
all these things intellectually, but the heart cannot face the
truth that the world and the corporate machine known as Atari
could not find an amicable way to coexist.


On Tuesday, July 30, 1996, Atari Corporation took each and
every share of it's company (ATC), wrapped them all in a tight
bundle and presented them to JTS Corporation; a maker and
distributor of hard disk drives. On Wednesday, the shares were
traded under the symbol of JTS. Within a few weeks, the
remaining staff of Atari that were not dismissed or did not
resign, moved to JTS' headquarters in San Jose, California.
The three people were assigned to different areas of the
building and all that really remains of the Atari namesake is a
Santa Clara warehouse full of unsold Jaguar and Lynx products.


It was only as long ago as mid 1995 that Atari executives
and staff believed things were finally taking a better turn.
Wal*Mart had agreed to place Jaguar game systems in 400 of their
Superstores across the country. Largely based on this promise
of new hope and the opportunities that open when such deals are
made, Atari invested heavily in the product and mechanisms
required to serve the Wal*Mart chain. But the philosophical
beliefs of the Atari decision makers that great products never
need advertising or promotions, put the Wal*Mart deal straight
into a tailspin. With money tied up in the product on shelves
as well as the costs to distribute them to get there, not much
was left to saturate any marketplace with advertising. While
parents rushed into stores to get their kids Saturns or
PlayStations, the few that picked up the Jaguar were chastised
by disappointed children on Christmas day.


In an effort to salvage the pending Wal*Mart situation,
desperate attempts to run infomercials across the country
were activated. The programs were professionally produced
by experts in the infomercial industry and designed to permit
Atari to run slightly different offers in different markets.
In spite of the relatively low cost of running infomercials,
the cost to produce them and support them is very high. The
results were disappointing. Of the few thousand people who
actually placed orders, many of them returned their purchases
after the Holidays. The kids wanted what they saw on TV during
the day! They wanted what their friends had! They wanted what
the magazines were raving about!


In early 1996, Wal*Mart began returning all remaining inventory
of Jaguar products. After reversing an "advertising allowance"
Atari was obligated to accept, the net benefit Atari realized
was an overflowing warehouse of inventory in semi-crushed boxes
and with firmly affixed price and security tags. Unable to find
a retailer willing to help distribute the numbers required to
stay afloat, Atari virtually discontinued operations and traded
any remaining cash to JTS in exchange for a graceful way to exit
the industry's back door.


Now that JTS has "absorbed" Atari, it really doesn't know what
to do with the bulk of machines Atari hoped to sell. It is
difficult to liquidate them. Even at liquidation prices,
consumers expect a minimal level of support which JTS has no
means to offer. The hundreds of calls they receive from
consumers that track them down each week are answered to the
best ability of one person. Inquiries with regard to licensing
Atari classic favorites for other applications such as handheld
games are handled by Mr. John Skruch who was with Atari for over
13 years.


In spite of Nintendo's claim that their newest game system is
the first 64-bit game system on the market, Atari Corporation
actually introduced the first 64- bit system just before
Christmas in 1993. Since Atari couldn't afford to launch the
system nationwide, the system was introduced in the New York and
San Francisco markets first. Beating the 32-bit systems to the
punch (Saturn/PlayStation), Atari enjoyed moderate success with
the Jaguar system and managed to lure shallow promises from
third-party companies to support the system. Unfortunately,
programmers grossly underestimated the time required to develop
64-bit games. The jump from 8-bit and 16-bit was wider than
anticipated. In addition, Atari was already spread thin,
monetarily, but were required to finance almost every title
that was in development.


After the initial launch, it took Atari almost a year before an
assortment of games began to hit store shelves. Even then,
having missed the '94 Holiday Season, many of the planned titles
were de-accelerated to minimize problems caused by rushing things
too fast. Consumers were not happy and retailers were equally
dismayed. The few ads that Atari was able to place in magazines
were often stating incorrect release dates because that
information changed almost every day although magazines deadline
their issues up to 120 days in advance.


It was in 1983 that Warner Communications handed Jack Tramiel
the reins of Atari. By this time, Atari was often categorized
as a household name, but few households wanted to spend much
money on new software and the systems were lasting forever.
No one needed to buy new ones. That, combined with Warner's
obscene spending, amounted to a *daily loss* of over $2 million.


Atari was physically spread all over the Silicon Valley with
personnel and equipment in literally 80 separate buildings; not
considering international offices and manufacturing facilities
Mr. Tramiel took only the home consumer branch of Atari and
forced Warner to deal with the arcade division separately.


Within a few years, Jack took the company public, introduced
an innovative new line of affordable 16-bit computers and
released the 7800 video game system.


To accomplish these miracles for Atari, Jack implemented his
"business is war" policies. While people who publicly quoted
his statement often felt that policy meant being extremely
aggressive in the marketplace, the meaning actually had closer
ties to Tramiel's experience as a concentration camp survivor.


Of the 80 buildings in Sunnyvale, Santa Clara and Milpitas,
almost every one of them were amputated from Atari's body
of liabilities. The people, the work, the heritage, the
history were fired or liquidated. Those who survived were
unsympathetically required to fill in the gaps and while
most tried, few actually found a way to be successfully do
what a dozen people before them did.


Atop the mountain, Jack pressed with an iron thumb. All
Fed/Ex mailings were required to be pre-approved by one of
a handful of people. "Unsigned" purchase orders went unpaid
regardless of the urgencies that inspired their creation.
Employees found themselves spending valuable time trying to
find ways around the system to accomplish their jobs. Many
of them lost their jobs for bending the rules or never finding
a way to make things work. As horrible as it all sounds, it
actually was the only way to protect Atari as a company and
give it a chance to survive as it did and did very well.