Originally Posted by
Pantechnicon
2. Because when the NES started to catch on the U.S., Atari, now under the control of Jack Tramiel, was reluctantly trying to play catch-up to get back into the console market. The 7800 was actually developed in 1984, shelved owing to the market crash of `84, then given a wide release in 1986. The XEGS came out the next year. So a better question might be why the XEGS, clearly inferior to the 7800 (whose inventory, I suspect, Atari mostly only wanted to be rid of at this point), was released as a "successor" to that system, let alone as a competitor to the NES? My guess was that Atari since XE development began in 1985, Atari had a lot of components laying around and this allowed a quicker, cheaper dev cycle for the XEGS. So Atari was able to put a "new" system on the market, sure, but there was no way it was going to be any threat to the NES. When you think about it, all Atari systems between the 400 and the XEGS (including the 5200) are virtually the same thing. So it was a case of 1979 Atari technology going up against 1983 Famicom technology. No contest.