Alcorn's work on Cosmos leaving Atari
When Ray Kassar replaced Bushnell as president, Atari became a marketing company. The old leadership took risks and pioneered new technologies. Instead of developing new technologies, Kassar preferred to push existing ideas to their fullest. Alcorn wanted to begin work on the next generation of home video-game hardware, but Kassar didn't even want to consider an alternative to the Atari VCS.
Toward the end of 1978, Alcorn assembled a team of engineers and began designing a game console called Cosmos. Unlike the VCS, Cosmos did not plug into a television set. It had a light-emitting diode display. Both systems played games stored on cartridges, but Cosmos's tiny cartridges had no electronics, simply a four-by-five inch mylar transparency that cost so little to manufacture that the entire cartridges could retail for $10.
Alcorn's team included two new engineers. Harry Jenkins, who had just graduated from Stanford University, and Roger Hector, a project designer who had done some impressive work in the coin-op division. Both were assigned to work directly under Alcorn on the Project.
Borrowing a page from Odyssey, the Cosmos used overlays to improve the look of its games. Cosmos's overlays, however, were among the most impressive technologies ever created by Atari engineers.
Atari negotiated a deal with a bank for access to patents belonging to Holosonics, a bankrupt corporation that controlled most of the world's patents for holograms- a technology for creating three-dimensional images using lasers. Alcorn brought in two specialists, Steve McGrew and Ken Haynes, to develop a process for mass-producing holograms that could be used with his game.
McGrew developed a process for creating holograms on mylar. In later years, Haynes expanded the technology for other uses, such as placing 3D pictures on credit cards. Alcorn used their mylar technology to create an impressive array of 3D holographic overlays for the Cosmos. One of the first games developed for the system was similar to Steve Russell's Spacewar- an outer-space dogfight in which two small ships battled. The game took place in empty space with no obstructions, but the holographic overlay created an extremely elaborate backdrop with whirling 3D asteroids. The overlay did not affect the game. The ships could not interact with the backdrop, but the visual effects were spectacular.
Before beginning the project, Alcorn asked Ray Kassar for permission to create a new stand-alone game system. According to Alcorn, Kassar seemed uninterested but did not object. By the middle of 1980, Alcorn and his team had completed a working prototype. When they showed it to marketing, they were told that the department had no interest in selling anything other than the VCS.
Alcorn, Jenkins, and Hector had invested too much time in Cosmos to abandon it. Other engineers advised them to simply walk away from the project, but Alcorn decided to market the unit himself. He asked for space to show Cosmos at Atari's booth during the 1980 Winter Consumer Electronics Show in the Las Vegas Convention Center. Amazingly, the marketing department said yes.
By this time, Mattel and Bally had entered the market with newer, more powerful consoles, but no one seemed to care. The VCS had more games and a much larger installed base. A constant stream of buyers from toy stores and department stores flowed through the Atari booth. While they were there, several buyers stopped by the Cosmos table, where Alcorn, Hector, and Jenkins demonstrated the console themselves. The holographic overlays attracted a lot of attention.
A few months later, Alcorn, Hector, and Jenkins manned a similar display at the Toy Fair in New York City. Having learned from his failure to sell Home Pong on the floor of the show, Alcorn also set up a suite for private meetings. Among the visitors to the booth was Al Nilsen, the new toy buyer for J. C. Penney.
Although the response to Cosmos was not even remotely close to the VCS, several buyers decided to gamble on the system. Alcorn returned to California from the Toy Fair with orders for 250,000 units. When he told Kassar that he wanted to begin manufacturings, Kassar derailed his plans. Despite the impressive number of orders, Kassar did not want to manufacture a game system that would compete with the VCS. Cosmos was never manufactured.
Alcorn and Hector long claimed that Kassar refused to manufacture the Cosmos because it represented competition for the VCS, but some of the people who tried the game console disagree. There were questions about the play value of its games. Kassar's decision to mothball Cosmos infuriated Alcorn, and he left the company. He hoped to receive the same retirement benefits that Bushnell, Williams, and Keenan were enjoying. According to Alcorn, being put "on the beach" by Manny Gerard meant receiving an expense account, a monthly check, and a company car.
Alcorn's plans, however, nearly did not come to pass. According to Warner Communications, Alcorn was not entitled to the same retirement package as Bushnell and Keenan. Warner attorneys claimed that Alcorn had negotiated his severance separated from the other board members and that he was not entitled to the same bonus-pool compensation.
By this time, Atari controlled 75 percent of the lucrative home video-game market and VCS sales were nearing $2 billion per year. The percent of a bonus pool that Bushnell and Keenan received represented a substantial income. The case went to court. Warner settled and Alcorn, Atari's first full-time engineer, retired "to the beach."[5]
