In 1979, Atari entered the personal computer market.  Atari toyed with the idea of introducing add-on components for it's VCS which would turn it into a computer - but the project was dropped.  Entering the computer market was actually a good idea - Atari had the technical expertise, and created excellent 8-bit systems, notably the 400 and 800 - but this market was full of competition from rivals such as Apple and Commodore.

Apple was founded by Atari's 40th employee, Steve Jobs and his friend, also formally at Atari, Steve Wozniak - who ironically offered the computer they invented (using Atari parts!) to Atari. Atari turned down the offer,  although it was Nolan who introduced the first investors to Jobs and Wozniak.

The machines received much critical acclaim for the advanced graphics and sound they produced - for the late 1970's, they were definitely ahead of their time.  During this period, IBM, Apple, Tandy and Commodore were the main players in the market - While the other manufacturers were updating their systems, it wasn't until late in 1982 that the first new revisions of the Atari computer line were launched.  The new line would be called "XL" or extended line. 

It was from 1980 to 1983 that Atari was fighting for survival in the gaming market - indecision in making the computer division a real player in the emerging home and small business market was hurt Atari - if a concrete decision had been made much earlier, Atari may well have become a major player under Warner.

The Atari 400 and 800 were fabulous pieces of micro engineering.  The 400 was the 16Kb entry level system with a flat membrane keyboard and it's big brother the 800, had 48Kb and a "real" keyboard.  They had an extensive array of peripherals, ranging from the 810, 5.25" Disk Drive (or the rare 815, which was a dual 5.25" - hand built to order and cost $1500) to the 830 Acoustic Modem and the famous CX40 joystick.

While R&D continued on the computer line and other projects and widgets - the "XL" line was being readied for launch. The new range   included a 600XL, 800XL,1200XL and the unreleased 1400XL - the 1450XLD which had an internal 5.25" disk drive was produced in very small quantities until it was axed.

Strategically, these were difficult times for management involved in such diversification - and as the years passed, some of the decisions made showed clearly how difficult Atari was to manage.  It was in 1978 Atari's founder, Nolan Bushnell, unhappy with many aspects of the Warner style, left the company - signing a contract agreement not to get involved with video entertainment for 10 years.   Bushnell went on to found the Chuck E Cheese pizza chain and other business interests such as the TOPO robot venture and digital map maker, Etak Inc (which was sold for $50 Million to Rupert Murdoch's group of companies).