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The return of King Pong

Legendary video game developer Nolan Bushnell figures he's good for one more big splash before he calls it quits on a remarkable career.

Don't tell Nolan Bushnell there are no second acts in American life. Or third or fourth, for that matter.

The entrepreneur and Silicon Valley pioneer pretty much created the video game industry with the founding of Atari in the 1970s. He made another bundle in the 1980s by launching the Chuck E. Cheese's chain of pizza parlors. He jump-started the automobile navigation system industry with the company that eventually became Etak.

Bushnell also had some failures along the way. His crack at the PC market, the Atari 800, was steamrolled by former Atari employees Steve Jobs and Steve Wozniak and their early Apple Computer systems. Androbot, his 1980s effort to popularize household robots, never got a product to market.

But Bushnell figures he's got at least one more breakthrough left in him. The entrepreneur started uWink, a somewhat mysterious entertainment technology venture, a few years ago and pledges to reveal a breakthrough technology soon that will build on many of his previous innovations.

Bushnell reviewed the highs and lows of his past with CNET News.com while in San Francisco recently for his induction into the Walk of Game, a new shrine of video game history.

You started playing computer games when you were working on mainframes in the 1960s. What made you think this could be some type of consumer technology?
Bushnell: The link was that I was working in an amusement park at the time. I was pursuing an engineering degree in the winter and working in the game department at a regional amusement park in Utah in the summer. What that gave me was knowledge of how the

"I feel in some way that I didn't invent the video game--I commercialized it."
financial side of the arcade business worked. And it was very easy to see that what I was playing on the mainframes, if I could bring it to the cost structure of an amusement park, that it would work.

I feel in some way that I didn't invent the video game--I commercialized it. The real digital video game was invented by a few guys who programmed PDP-1s at MIT. The very first time a video screen was connected to a computer, one of the first things the engineers thought of was playing a game on it.

The Magnavox Odyssey got to market a wee bit before Atari. What gave you the edge?
Bushnell: Magnavox didn't invent the digital video game. They had an analog game. A lot of people don't realize that back in those days, there was a big fight over which would be bigger, the digital computer or the analog computer. They did an excellent job of creating a game using analog circuitry, but it just wasn't fun.

The classic Atari games still show up on phones and other gadgets. Have you been surprised at how durable those games have been?
Bushnell: Actually not. I think that at the core of every game, there's timing, tensioning and strategy. In some ways, the old games are a little bit purer because they completely focused on those elements instead of production values.

If you have a tournament chess player, they will only play with one kind of chess set. They don't want pieces made of glass or intricately carved things. All those production values that make

"We were known as a party place, but the important thing is that parties didn't happen unless quotas were made."
very pretty chess sets actually make the game harder to play. In some ways, if you focus on production values and you short-change rules and structure, you end up with a poorer game than something that's really simple.

When did you start to realize you had a real phenomenon going with Atari?
Bushnell: It was a gradual process. The first indication was when we collected the money out of the first (arcade) "Pong" game, and there was so much in there it had jammed the coin mechanism. At that point in time, I knew I had a successful business.

But were you thinking, "Now we'll put one of these in every home?"
Bushnell: Not really. It was a situation where the technology was so expensive at that time, and not very reliable. I felt that in the home, you needed to have something much more reliable and at a significantly lower cost. We started out in the arcade business, and that worked fine. The next epiphany, if you would, was when we figured out we could put Pong on a single LSI chip...All of a sudden, we knew we could put one in every home. All of a sudden, we went from a very successful coin-op business to a potential consumer business.

Then the microprocessor got strong enough. Remember, the first games were not computers at all; they were really digital signal generators, if you will. You couldn't run a program fast enough in those days. The microprocessor, the 4-bit 4004, wasn't invented until 1974. Our first game came out in 1970. We were four years before the microprocessor. And the 4004 still wasn't good enough. We had to wait until we got to the 6502 or the 6800 series before there was even a possibility. Even then, they were too slow. We had to develop the Stella chip...which basically did all the screen refresh and other things that have to happen in real time, much faster than a microprocessor running at 300KHz could possibly do.

What precipitated your decision to sell Atari to Warner Communications (in 1976)? Was it just more fun to start a company than run one?
Bushnell: What happened is a growing business consumes capital at prodigious rates. And Wall Street had a hard time distinguishing between the frivolity of our product and the fact that it was a serious business. Raising capital was very, very difficult for us. In order to go into the consumer marketplace, we just needed much deeper pockets, and that's why we decided to sell.

Besides video games, you also came that close to launching the PC business. What gave Apple the edge over the Atari 800?
Bushnell: The big difference was Warner Communications against Steve Jobs. Warner could never win that one. I don't know if I could have, but I wouldn't have made the same mistakes Warner did.

The main problem that allowed Apple to dominate was, in fact, not technology but business strategy. Steve was out evangelizing to software developers to build software for their machines.

Our strategy with the video games was that we basically wanted to give away the hardware and make money on the software. That called for a quasi-closed system. Warner thought that was the right way to do the computers business, too. So they said, "Not only are we not going to help third-party developers, we're going to sue you if you use our operating environment." So everybody that wanted to get into the software business supported Apple over Atari.

So basically Warner drove the coffin nail in the Atari 800, despite it having a clearly superior chipset, a better operating environment...We had a lot of innovations in the Atari 800 that became standard later on.

What would the PC business be like now if the 800 had been given a chance?
Bushnell: I know I wouldn't have made the mistakes Warner did.

Would you have made the mistakes Apple did later on?
Bushnell: I don't know. It's so gratuitous to say, "No, I would have been much smarter." I think that it would have been a good horse race.

Atari was known for being a very fun place to work, which seems to have gone out of the video game industry. Any advice for game developers today?
Bushnell: Atari's strategy was actually quite simple and, I think, quite elegant. We were known as a party place, but the important thing is that parties didn't happen unless quotas were made. We had a lot of parties because people made their numbers...We had a very young work force that was more interested in having a party than making more money, so there was a sound business principle behind the parties.

Is it possible to run a company that way now, when it takes years and millions of dollars to make a game?
Bushnell: I think it would be hard. At the same time, I believe you can either treat employees as equals, as adults, in which you treat everybody with equal dignity. Or you can have a monarchy, where there are the executives and there are the serfs. Monarchies work, but in today's world, where people are highly educated, highly capable and highly mobile, I think treating them like adults is a better way.

You started out at a time when good ideas and hard work were all you needed. How has entrepreneurship changed since then?
Bushnell: I think it's still the same. I think the next Apple or the next Atari will be started within the next few months, we just won't know it for five years.

The venture capital process hasn't mucked everything up with focus groups and strategic planning?
Bushnell: In some ways the VC process has hurt things. I feel that in some ways, it's perhaps a blessing that Atari could not raise capital from third parties, so we had to do it by tricks and gimmicks. We didn't raise any venture capital until we were $40 million in sales.

The venture capitalists are clearly a catalyst to making things happen faster...but I think it does represent a break from some of the creative business structures that were started. For instance, you can trace the casual dress code back to Atari. And it came from the premise that we don't care how you look, we don't care when you come to work--as long as the work gets done. It's part of treating people like adults.

You were right about video games, right about high-tech pizza parlors. What about personal robots? Were you just ahead of the curve there?
The personal robot, to me, was a defeat--and it was a defeat based on unintended consequences. We had a PC at the core, and in those days, noise immunity on a computer was very, very low. What we could not solve was that robots running across any surface would generate static electricity. When the static electricity was discharged, sometimes just across the bearings of the wheels, that was enough to reset the computer. We tried all kinds of isolation approaches.

With a computer, (if) you get the blue screen of death, you reboot, you go forward. In a robot environment, if you have a computer failure, all your sensors go out, all your fail-safe stuff. So the robot can be locked into a mode where it's going full-speed into a wall. We used to laughingly call that the "mow the baby" mode. It was a thing where we never felt the robot was ready for the marketplace.

I'm a little confused on what the plan is for uWink. Seems like you've got your finger in a lot of pies, from arcade games to mobile phones.
Bushnell: Within (a few) weeks, all will be made clear. We'll have a major announcement soon. Think of all these little pieces of technology that we have in our product lines, aiming toward a direction in which I had to develop certain pieces of technology, and I thought I'd monetize it on the way, but they were never the end goal.

So an autonomous, video game playing, coin-op pizza parlor robot?
Bushnell: (Chuckling) You forgot navigation systems.

Any regrets, like letting Steve Jobs quit, or selling Atari too cheap?
Bushnell: You can spend your life doing woulda, shoulda, coulda. I wish I hadn't sold to Warner, because I think that the world would be a very different place with Atari being the preeminent video game company today. It really bothers me that Sony and Nintendo and all those guys harvested the business that should have been rightly ours. The center of gravity moved east, and it should rightly have been here.