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On June 27th, 1972, Nolan Bushnell and Ted Dabney officially created their own company named Syzygy Co., each contributing a $250 share -- mostly from the meager profits earned from Computer Space.xi Bushnell said they decided on Syzygy because “I thought it was a cool name when I found it in the dictionary”.xii However, they soon discovered that the name Syzygy was already taken by a roofing company.xiii Although they continued to use it for couple years afterwards to describe their engineering process, they had to choose another name.xiv Bushnell suggested “Atari”, a hold-over from his days as Go player at Utah State. Atari roughly translated to “you are about to be engulfed"xv, which they thought sounded pretty cool at the time and also served another purpose.
“I thought Atari was a good warning to the competition in the gaming industry” xvi - Nolan Bushnell
Atari did have a tentative contract (with Bally, to create a driving game) but Bushnell wanted Alcorn to cut his teeth on something simple for his first effort. The primitive ping-pong game Bushnell had seen at Magnavox seemed like a good candidate.
"I had to come up with a game people already knew how to play; something so simple that any drunk in a bar could play."xix – Nolan Bushnell
Neither Alcorn nor Bushnell were impressed with Odyssey and its analog components, so the game would have to be improved. In any event, Pong was only practice, and Bushnell did not plan to take it seriously. “I thought it was going to be a throwaway,” Bushnell told Playboy Magazine, "but when he (Alcorn) got it up and running, it turned out to be a hell of a lot of fun.” xx
Just like Computer Space, Pong was a TTL discreet-logic machine. It had no microprocessor, but instead used individual chips to create the logic for the game. The key to saving money was to design the game so well that it used the fewest number of chips.
“I had the prototype running in three months and I was very disappointed because it had about 75 TTL IC's and would cost way too much for a high volume home machine. It turns out that Nolan had something else in mind. He lied about the contract with GE and gave me this project because it was the simplest game he could think of and he just wanted me to practice on something.” xxi - Al Alcorn