Lecture+5+Notes

= __Lecture 5 Notes__ = ===For the Fall 2010 Discussion Board, Click [|HERE] ===

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 * Pinball/Amusement industry – still associated with organized crime/gambling
 * Bushnell/Atari needed money to start building Pong – tried to get a loan from banks
 * Banks refused – saw Pong as new type of Pinball, which they saw as linked to gambling
 * Banks do not generally loan out money for gambling projects
 * Plus, Bushnell was not business-type – tall, gangly, unkempt hair – looked like a hippie
 * Wells Fargo Bank finally gave Bushnell $50,000 – much less than he had hoped for
 * Atari needed more space for manufacturing – renting adjacent offices/knocking down wall didn't give enough space
 * Leased abandoned roller-skating rink – became Atari's assembly plant
 * Put Alcorn in charge of technical issues/quality control of Pong machines
 * Needed to hire worked to assemble machines – contacted local unemployment office
 * Hired nearly everyone that was sent their way – most entirely untrained
 * Workers paid $1.75 an hour – slight above minimum wage, but got 'benefits”
 * Benefits included getting to play games and “Friday night beer busts”
 * Workers not ideal – drug use was rampant – in addition to an overwhelming amount of marijuana use, an Atari designer visiting the manufacturing facility claims to have found used syringes on bathroom floor
 * Workers also tried to make extra money stealing parts and TV's and selling to pawnshops
 * Atari cracked down on theft, but drug use continued
 * Also, untrained workers did not perform too well
 * Empty Pong cabinets wheeled in, workers took turns installing various parts – no formal procedure
 * Slow process – Only about 10 machines produced a day – Many machines did not pass quality testing
 * Still, slow but steady supply of working machines being built
 * Bushnell started to set up machines along pinball route – did just as well as Andy Capp's
 * Hired Steve Bristow to handle route – Bristow did work-study at Ampex after Alcorn left
 * Bristow received 1 percent of receipts – due to large amount of money along route, he became afraid of being attacked
 * Tried to get a permit for a gun – not allowed – found no law against carrying a hatchet
 * Wife came with him – he collected money, she stood guard with a hatchet
 * Word of Pong's success spread quickly
 * **Typical novelty games took in $40-$50 a week – Pong brought in up to $200 a week**
 * **In light of such numbers, distributors began buying machines from Atari**
 * **By the end of 1973, 2500 Pong machines sold – by the end of 1974, over 8000**
 * **Side effect of Pong's success – Odyssey began selling well – 85,000 sold in its first year (which was also Pong's 1st year)**
 * Atari grew, as did Bushnell's ambitions – not everyone at Atari took the change well
 * **Ted Dabney not ready to be head of large corporation – Bushnell asked him to step down**
 * Dabney fought, then reluctantly left – took pinball route with him and Atari shares
 * Shares ended up making him a millionaire – route continued to be profitable for him
 * Replace Dabney – Bushnell promoted employees and hired new ones – all former Ampex employees
 * **New Atari Board**
 * **Nolan Bushnell – retained title of President and CEO**
 * **New Employee – Joe Keenan – Bushnell's next-door neighbor – Second-in-command**
 * **Al Alcorn – promoted to Head of Research and Development**
 * **Steve Bristow – promoted to Vice President of Engineering**
 * **New Employee – Bill White – Chief Financial Officer**
 * **New Employee – Gil Williams – Head of Manufacturing**
 * **New Employee – Gene Lipkin – Vice President of Sales**
 * **Collectively these 7 were called “The King, the Queen, and the five Princes”**
 * Lipkin – only member with executive experience in Coin-Op Amusement Industry
 * Lipkin had worked for Florida-based Allied Leisure – brought business experience to Atari board
 * Bushnell believed in working smart and fun, rather than hard – everyone on board agreed
 * Board members frequently smoked pot, held meetings in hot tubs, and named projects after attractive female co-workers
 * **In 1974 Bushnell added the final piece to his Atari – Steven Mayer and Larry Emmons**
 * **Mayer and Emmons – also both former Ampex employees – started consulting firm in Grass Valley, CA**
 * **Bushnell used Mayer and Emmons as a think-tank to develop Atari ideas and strategies**
 * **Grass Valley facility (Mayer and Emmons) became vital to Atari**
 * Board often took retreats there and many projects principally developed there
 * Eventually Bushnell outright bought Grass Valley facility
 * Mayer and Emmons became part of Atari family
 * **Executive and creative departments firmly in place**
 * **Bushnell became manager and promoter – rarely designed or invented anymore**
 * **Spent most of his time imagining new directions and planning a future for Atari**
 * Believed that as long as new ideas developed, Atari would grow unimpeded
 * Still, Bushnell involved himself in some practical matters
 * **Remembered Magnavox law-suit – filed patents for solid-state technology in Pong**
 * **By the time patent issued it was worthless – innumerable copy-cat machines**
 * **By 1974, Video Ping-Pong machines virtually everywhere that amusement games were**
 * **Less than 1/3 official Atari Pong machines**
 * Bushnell and Atari had new challenge – competition of imitators