manufacturers and four jukebox manufacturers, and for all intents and purposes, that was the manufacturing side of the amusement machine business.
It stayed that way for quite some time—until 1972. In 1972, Nolan Bushnell, a rather clever electronics engineer from Northern California, adapted Ralph Baer’s Magnavox toy for playing ping-pong on the television screen into a coin machine. As the world knows, he called it
Pong.
—Eddie Adlum
My kid came home from school one day and said that Nolan Bushnell’s daughter told the teacher that her father invented
Pong.
Well, I told him to go to Nolan’s daughter and say, “If your daddy invented
Pong
, how come he had to ask my daddy to come fix his machine when it broke down?”
—Al Alcorn, former “sort of” vice president of engineering, Atari Corporation
I n 1972, President Richard Nixon had all but locked up his re-election by visiting the People’s Republic of China and the Soviet Union; the Supreme Court deemed the death penalty cruel and unusual punishment and ruled it unconstitutional; and an investigation by White House counsel John Dean found the Nixon administration innocent of any involvement in the attempted burglary of the Democratic Party headquarters in the Watergate apartment complex.
The Dow Jones Industrial Average hit 1000 points for the first time on November 14, 1972, and the economy looked brighter than it had in five years. Along with a healthy economy came thousands of start-up companies.
On June 27, 1972, Nolan Bushnell and Ted Dabney applied to have Atari incorporated. They founded their company with an initial investment of $250 each. Within ten years, Atari would grow into a $2-billion-a-year entertainment giant, making it the fastest-growing company in U.S. history.
Atari’s first office was located in a Santa Clara industrial zone—a crude 1,000-square-foot space in an inexpensive concrete building, made to house start-up companies. These were lean times for the company. It existed on a few small contracts and the limited royalties Bushnell received from
Computer Space.
Bally, now a very successful pinball and slot machine manufacturer, became one of Atari’s first customers, signing a limited contract for Bushnell to develop new extra-wide pinball machines. Bushnell also continued working on a multiplayer version of
Computer Space
, which he hoped to sell to his old employers at Nutting Associates.
We had a 2,000-square-foot facility. This was the original garage shop—you know, one of those places with a roll-up door, one office, and a bathroom. It had sort of a little reception area, and part of our requirement to the landlords was that they put in another office. That was Ted’s lab.
Incubator facilities like that are unique to California. They’re cheap and they’re made cheap because … what they really want you to do, and what Cole Properties, the ones that were running the building wanted, was to sign us for a long lease.
Eighty percent of the companies [that sign up] don’t grow or stay there for a long time until the lease is out. But some companies get really bigquickly. And they’ll say, oh, we’ll let you out of the lease. You can just roll it into one of our other properties.
—Nolan Bushnell
To create a steadier income base, Bushnell and Dabney started a pinball route that included a local bar, some coffee shops, and the Student Union building at Stanford University. Because they could buy the pinball machines cheaply and knew how to maintain them, the route became a profitable asset. It eventually became so lucrative, in fact, that when Dabney left the company, he accepted the route as part of his settlement.
The first full-time employee of Atari Corporation was Cynthia Villanueva, a 17-year-old who used to baby-sit Bushnell’s children. She needed a summer job so Bushnell hired her as a receptionist. He instructed her to “put on the show,” giving callers the impression that Atari
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