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Design of the "Home Computer System" started at Atari as soon as the [[Atari 2600|Atari Video Computer System]] was released in late 1977. While designing the VCS in 1976, the engineering team from Atari Grass Valley Research Center (originally [[Cyan Engineering]])<ref>{{cite web |last=Fulton |first=Steve |title=The History of Atari: 1971-1977 |website=[[Game Developer (website)|Gamasutra]] |date=November 6, 2007 |at=para. 1974: The Crunch Hits |url=https://www.gamedeveloper.com/business/the-history-of-atari-1971-1977 |access-date=2023-07-23}}</ref> said the system would have a three-year lifespan before becoming obsolete. They started planning for a console that would be ready to replace it around 1979.<ref name=joe/>
They developed essentially a greatly updated version of the VCS, fixing its major limitations but sharing a similar design philosophy.<ref name=joe>{{cite conference |last=Decuir |first=Joe |author-link=Joseph C. Decuir
During the early development period, the home computer era began in earnest with the [[TRS-80]], [[Commodore PET|PET]], and [[Apple II (1977 computer)|Apple II]]—what [[Byte (magazine)|''Byte'']] magazine dubbed the "1977 Trinity".<ref>{{cite web|url=http://www.byte.com/art/9509/sec7/art15.htm|title=Most Important Companies|access-date=June 10, 2008|date=September 1995|work=[[Byte (magazine)|Byte Magazine]]|archive-url=https://web.archive.org/web/20080618072507/http://www.byte.com/art/9509/sec7/art15.htm|archive-date=June 18, 2008|url-status=dead}}</ref> [[Nolan Bushnell]] sold Atari to [[Warner Communications]] for {{US$|28 million}} in 1976 to fund the launch of the VCS.<ref>{{Cite book |last=Fisher |first=Adam |url=https://www.worldcat.org/title/on1042088095 |title=Valley of genius: the uncensored history of Silicon Valley, as told by the hackers, founders, and freaks who made it boom |date=2018 |publisher=Twelve |isbn=978-1-4555-5902-2 |edition= |___location=New York |oclc=on1042088095}}</ref> In 1978, Warner hired [[Ray Kassar]] as CEO of Atari. Kassar wanted the chipset used in a home computer to challenge Apple,<ref name=atarihistory>{{cite web|title=Computer Systems|website=Atari|url=http://www.atarimuseum.com/computers/computers.html|access-date=September 23, 2019|archive-date=May 5, 2021|archive-url=https://web.archive.org/web/20210505141552/http://www.atarimuseum.com/computers/computers.html|url-status=dead}}</ref> so it needed character graphics, some form of expansion for [[peripheral]]s, and run the then-universal [[BASIC]] programming language.<ref name=joe/>
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