Also in 1979, the Channel-F was resurrected, not by Fairchild, but by Zircom as the "System II" and was smaller and cheaper than the original and featured removable controllers as opposed to built in paddles.
Microvision was introduced in 1979 as well. Designed by Jay Smith and released by Milton Bradley, the Microvision was the industry's first portable cartridge based video game console. Make the distinction here. Sure, Milton Bradley already had Simon and Mattel had Electronic Football, but the Microvision had cartridges that allowed you to change the games.
1979 was also the year that Atari managed to anger enough employees that the industry's first third party cartridge manufacturer was spawned. Activision is born, and designers get credit for their work right on the box.
Atari was not too concerned with Activision as Atari VCS sales skyrocketed in 1980 because of the first arcade game ported to a home game console. Space Invaders was a huge success.
By porting more arcade games to the VCS in 1981 Atari continued to excel, despite losing a large portion of their creative staff to Activision. Missile Command and Asteroids were released in 1981.
If Mattel hadn't taken a big enough notch out of Atari's home console market in 1979 and if Activision hadn't take a big enough notch out of Atari's software market in 1980, big toy manufacturer Coleco introduced the ColecoVision in 1982, taking a bite out of whatever was left of Atari's market in 1983.
The ColecoVision's biggest attraction was what made the Atari VCS regain popularity in 1980: Arcade titles. The machine was bundled with the arcade classic Donkey Kong and featured several other arcade titles such as Time Pilot, Zaxxon and Gorf. As a matter of fact, an original title for the ColecoVision, unless it was tied to a movie, a sport or a cartoon, was a rare thing!
Another selling point of the ColecoVision was insane expandability. There was an expansion module that allowed Atari VCS games to be played as well as a Super Action controller that featured more buttons than the standard controller; a steering wheel bundled with Sega's car racing game named Turbo and a "Roller Controller" roller ball that rivaled even the finest coin-op track balls.
There was even a computer that could be plugged into the ColecoVision. A computer called Adam. Despite the computer being a mere spin off of a game system, the Adam, with its Z80 processor, 80K of RAM, word processor program in ROM and super high-speed tape drives, was actually quite an impressive computer.
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