Hoping to launch a price war to kindle its sagging fortunes, Atari Corp. is expected to announce today it will cut the price of its 800XL computer from $179 to roughly $100.
The move is designed to position Atari for the high-volume Christmas selling season and pits Atari Chairman Jack Tramiel squarely against Commodore International Ltd., the company he helped found and run until he left early this year.
Commodore, manufacturer of the popular Commodore 64 computer, is the billion-dollar-a-year leader in the home computer market. The Commodore 64 currently sells for roughly $200.
Commodore has no plans to respond to the Atari price cut. "Commodore does not intend to do anything with its current prices," said Steven Greenberg, a Commodore spokesman.
"There's no question that this the Atari 800XL at roughly $100 will be a more appealing impulse buy," said Tim Bajarin, a research analyst with Creative Strategies, a California-based industry analysis firm. He asserted that the price cut will eat significantly into Commodore's Christmas sales.
A key question, however, is how many computers Atari can put into the stores for the Christmas selling season. The company has an estimated 300,000 to 500,000 machines in inventory. Potentially, that represents as much as one-third of the projected home computer sales for this Christmas season.
Tramiel purchased Atari from Warner Communications Inc. this July for more than $250 million in notes. Atari, which once had been the most profitable of Warner's companies with more than $2 billion in annual sales in 1982, had lost more than $750 million since the collapse of the video-games market at the end of 1982. Many analysts said that Warner simply "got rid of" Atari by selling it to Tramiel.
Tramiel, who has a reputation as a cost-cutter and aggressive marketer, cut the price of the Atari 800XL computer from $239 to $179 immediately after taking over the company. He is believed to have several home computers under development but does not expect to put them into the market this year.
There is concern over whether Atari will continue to manufacture the computer or whether Tramiel is liquidating his inventory. Atari officials were unavailable for comment.