Atari Corporation · 1987–1991 · 100,000 in its first Christmas season
Atari repackaged its 65XE home computer as a $159 games console in 1987, with a detachable keyboard and a light gun. It sold out its first production run, then faded beside the NES.
By 1987 the Nintendo Entertainment System was reviving the American console market, and Atari Corporation, under Jack Tramiel, answered with two machines: the Atari 7800 and the XE Game System. The XEGS was an industrial redesign of the Atari 65XE home computer, a member of the Atari 8-bit family that dated back to 1979, packaged and marketed as a games console. It launched in late 1987 at $159. Because it was a computer underneath, the XEGS was fully compatible with Atari 8-bit software and peripherals. The deluxe set included the console, a CX40 joystick, a keyboard that turned it into a home computer, and the XG-1 light gun. Missile Command was built into the console, Flight Simulator II came with the keyboard, and Bug Hunt used the light gun. Atari sold 100,000 units over the 1987 Christmas season — every console it had produced for the launch. The success did not last. The XEGS competed not only with the NES and Sega's Master System but with Atari's own 7800, and much of its library consisted of older 8-bit computer games. Atari discontinued its 8-bit line, the XEGS included, in December 1991.