In 1978 when CEO Ray Kassar took over Atari, he seized the opportunity to diversify from the video game market into the embryonic realm of home computers. A group of Atari engineers, headed by Jay Minor, created two computers based on the same microchip. Each was meant to fill its own niche in the young market.
In late 1978, Atari released the 400 and 800 computers. At $499, the Atari 400 was the cheaper of the two and was designed as an introductory system. With the 400, Atari sought to keep pace with other inexpensive computers aimed at the average cost-conscious consumer.
In its developmental stage, the 400 was named "Candy" after a secretary working for Atari. The system was or originally manufactured with 8KB RAM (later models contained 16KB), 10KB ROM, a cartridge port, a plastic membrane keyboard and an RF modulator to connect the system to a home television set. It was powered by MOS Technology's 6502 microprocessor that ran at 1.79MHz. It contained 4 ports for controllers such as digital or analog joysticks, paddle wheels, or light pens.
The Atari 400 and 800 computers featured several dedicated processors other than the 6502 CPU. The Pokey chip provided 4-channel sound (although it could only output through the television speaker); the PIA chip managed the controller ports; the ANTIC (Alpha Numeric Television Interface Circuit) managed the system's display; and the CTIA (Colleen Television Interface Adapter) graphics chip could produce 128 colors. In November 1981, Atari replaced the CTIA chip on its 400 and 800 computers with the GTIA (General Television Interface Adapter) chip that increased the color selection to 256 and provided 3 different video modes.
The Atari 400's wedge-shaped console featured a keyboard and large (8KB) cartridge port at the top. This port was concealed by a plastic door that users would flip up to insert a game cartridge. When the lid was in the down position, the 400 system was shut off to protect its internal circuits.
The console was designed for young people, especially children. The membrane keyboard prevented damage from spilled drinks or food.
The external storage device Atari offered was the 410 cassette tape player. It could record or output data at 300 baud. Non-Atari tape players would not function as Atari cassette drives.
With the release of the hugely popular Star Raiders in 1981 (created by Atari designer Doug Neubauer) the 400 attracted attention as a game machine. It could boast graphics that were far superior to what could be seen generated from video game consoles of the time. The Atari 400 and 800 computers developed a solid following among video game enthusiasts. Among consumers they acquired a reputation of being one-dimensional expensive game machines. In May 1981, Atari announced that the 400 system was being discontinued. ~ Dave Beuscher, All Game Guide