Atari is preparing its newest offensive in the price and product war between home computer companies fighting to capture market share.
Although Atari will not officially confirm it, the company will stop producing its 400 and 800 line of computers, sources inside and outside the company say. In their place, the Warner Communications subsidiary will introduce a new computer, the Atari 600, which is an upgraded version of the 400 unit. Improvements include added memory and a typewriter-like keyboard.
The Atari 400 unit has sold at retail as low as $99. The list price of the new 600 machine is expected to be $159, and it will be unveiled at the Consumer Electronics Show in Chicago in June.
Atari also plans to drop the price of its 1200XL computer, a very powerful machine that was introduced last winter at a list price of "under $1,000." The 1200XL reportedly will be renamed as the 800XL and priced at $299.
The machines will be compatible with existing Atari software.
The Atari move, analysts say, is clearly a response to declining market share in the ultracompetitive home computer marketplace. Atari, based in Sunnyvale, Calif., sold 400,000 of its 400 and 800 computers last year, according to The Yankee Group, a Boston-based computer consulting firm, which accounted for 17 percent the home computer sales. By contrast, Commodore International held 23 percent of the market and sold more that 550,000 units of its VIC-20 computer. The Yankee Group estimated that 2.4 million home computers were sold in 1982 and that more than 6 million home computers will be sold this year.
"Atari is losing share," said Lee Isgur, a research analyst with Paine, Webber, "and they are now trying to compete with Commodore on price."
Commodore recently made a trade-in offer to consumers interested in its Commodore 64 computer. By turning in a home computer or video-game unit, customers would get a $100 rebate on the Commodore machine. Between the rebate and dealer discounting, the 64 dropped from its introductory price of $595 to under $300. Discounting of the VIC-20 has dropped its retail price to under $100. These price cuts put enormous pressure on Atari to respond.
" Atari has always reacted to what people have been doing," said Steven Greenberg, a Commodore spokesman. "They have not been innovative. They thought the Atari name was a franchise: I suppose the Packard name was, as well."
The problem, says Isgur, is one of perception as well as price. Atari is seen by many consumers as a video-games company rather than a home computer company. Atari will have to initiate a marketing campaign to change that image, Isgur contends.
However, Atari does have a fairly successful line of video games and personal computer software for its existing computer base. The company recently announced that it will make its software available to competing computers, such as Commodore's machines, Texas Instruments' 99/4As and Radio Shack's TRS-80s.