Tramiel stupidly let the 7800s that were already manufactured sit in a warehouse for 2 years because he wanted to focus on computers. There was a legal issue where Atari did not pay the company that actually designed the system but that could have been resolved at any time. There was actually a limited release in New York and L.A. I believe in 1984. I wonder what things would be like today if Atari had licensed the NES when they had the opportunity...
RE: Atari Shuts Down the 7800 – Today in History – January 1st, 1992