With very little time to sell in 1979, 1980 became the first real year of the Atari 8-bit computers. As the year began, several games were released for the platform including 3D-Tic-Tac-Toe, Super Breakout and Space Invaders. Space Invaders was particularly interesting.
Even though Atari had secured the license from Taito, and the 8-bit computers had the power to replicate the game exactly as designed, programmer Rob Fulop decided to make an almost entirely different game.
"The reason Atari 800 was different from the original was very simple and somewhat embarrassing. I was 23 years old at the time, and with one 'port' already under my belt (2600 Night Driver), I figured I was far too cool to do another straight port of an existing coin-op game. You have to remember that at Atari, programmers had nobody that approved their plans, basically people like myself were given 100 percent liberty to create whatever we wanted. There was no approval process, no 'pitch meetings', no specs that needed sign off.
In retrospect, such freedom is really astonishing to me given what is now required to put something into production. But at that time, it was totally up to the programmer. Nobody told me to do Space Invaders, it was my choice. I decided to change the original, not because I thought the original was 'broken' in any way, but simply because I was looking to 'make my mark' whatever that meant." cxxxvii
- Rob Fulop
The game was so different, in fact, that an independent developer named Joe Hellesen (who would go on to create many more 8-bit, ST and Amiga titles including Pac-Man for the Atari 8-bit computers) created a nearly arcade perfect version in 1981.
After the initial run of games for the 8-bit computers, though, Atari was ready to stop all game development on the machine. Atari management was keen to differentiate the computers and stop the comparisons to the VCS.
"One of the very few decisions they were confident in was the decision to clearly differentiate the home computer from the video game machine... So the rule was simple: no more games." cxxxviii
- Chris Crawford
Instead of working on games, Crawford got started on several edutainment titles, including a power company simulation named Energy Czar and nuclear reactor simulator named SCRAM. Fellow programmers were hard at work on bookkeeping and business software.
However, even though Atari wanted to separate the computer line from its video games so it could be seen as a serious contender in the market, the company made one huge and glaring mistake that would pretty much ruin that idea before it ever got off the ground: it released the game Star Raiders.
Programmed by Doug Neubauer, the game was released in March of 1980. Neubauer was hired by Atari in 1979 as a chip design engineer, but worked on Star Raiders on the side, developing on a wire-wrapped 8-bit prototype before the production models were ready. Star Raiders was designed as 3D version of a game that was very popular on college campuses and computer rooms in the 1970s.
"Star Raiders was to be a 3-D version of the Star Trek game played on the mainframe computers of that time. The Star Trek game was all text and not played in real time, but it had the idea of ship damage and sector scanners and charts." cxxxix
- Doug Neubauer
The 3D visuals and game play of Star Raiders was like nothing that had come before in a computer games. Neubauer's fellow employees at Atari were blown away by the finished product.
"The employees in the company went bonkers over the game, which was the first true-to-life, three-dimensional videogame... The visual effects were dazzling, especially when the stars whizzed by when you warped, or when the four kinds of enemy ships came zooming out of nowhere either behind or in front of you." cxl
- Michael S. Tomczyk
Upon release, Star Raiders became the first "killer app" of computer gaming. It was the first computer game that could be called a "machine seller".
"It's pretty amazing, the way the game caught on. I think it was the first game to combine action with a strategy screen, and luckily, the concept worked out pretty well." cxli
- Doug Neubauer
Even the mainstream press caught on to the fury over the game.
"The name of the game is Star Raiders. It is the best possible combination of a shooting gallery and a planetarium. It is the reason I was up till 1 a.m. the night before. It costs about $530 to own one, assuming you've already got a color TV." cxlii
-Henry Allen, The Washington Post, September 2, 1980
Of course, the success of Star Raiders had a serious downside for the Atari home computer division: it solidified the industry misconception that the 400 and 800 were not serious computers.
"Who would buy a serious computer from the world's most successful video game and arcade company? Many customers thought the Atari 400 and 800 were more expensive versions of the Atari 2600 video game machine. Some people even doubted whether the Atari 400 and 800 were real computers. " cxliii
- Michael S. Tomczyk
One of the main problems for the Atari 8-bit computers was their reputation for having a lack of software. Atari simply could not create enough titles in-house to make the relatively expensive purchase of an Atari computer worthwhile to anyone, other than hardcore gamers and game programmers.
"Unfortunately, Atari neutralized their own advantage. To everyone's shock and dismay, they decided to keep secret vital technical information like memory maps and bus architectures which programmers needed to write software. They then tried to blackmail programmers by indicating that they could get technical information only if they signed up to write Atari-brand software. This alienated the fiercely independent hobbyist/programmer community, and as a result many serious programmers started writing software for other machines instead. By the time Atari realized their mistake and started wooing the serious programmers, it was too late. The only programmers who remained loyal were game programmers." cxliv
- Michael S. Tomczyk
Still, the inside development team continued to speak out about the third party software situation, trying to convince management that they were making a mistake.
"The attitude of the executives was, 'We want to make all the money on the software. We don't want any competitors'. They were having competitors with the VCS and the programmers were trying to explain that, 'No, that's not how it works, you need a big library of software, you need to encourage them,' and I was one of the people doing that." cxlv
- Chris Crawford
By the end of 1980, some third party software started to trickle out for the Atari 8-bit computers. Even though most of it was written in BASIC and text-based, such as Midway Campaign and Lords Of Karma from Avalon Hill, much more was on the way.
Despite Atari's best efforts to bury the gaming capabilities of the computers, there were programmers, hobbyists, hackers and midnight coders finding ways to make quality games and get them to market.
By the end of 1980, Atari had sold 35,000 computers cxlvi and sales picked up so much in December that the machines had to be allocated in small batches to dealers across the country.
Even so, the computer business lost $10,000,000 on $10,000,000 in sales, prompting Atari to spin off the computer division from the consumer division in October so that it would not mar the massive success of the VCS.