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The success of Pong resulted in Bushnell pushing his employees to create new products. In 1974, Atari engineer Harold Lee proposed a home version of Pong that would connect to a television: Home Pong. The system began development under the codename Darlene, named after an attractive female employee at Atari. Alcorn worked with Lee to develop the designs and prototype, and based them on the same digital technology used in their arcade games. The two worked in shifts to save time and money; Lee worked on the design’s logic during the day, while Alcorn debugged the designs in the evenings. After the designs were approved, fellow Atari engineer Bob Brown assisted Alcorn and Lee in building a prototype. The prototype consisted of a device attached to a wooden pedestal containing over a hundred wires, which would eventually be replaced with a single chip designed by Alcorn and Lee; the chip had yet to be tested and built before the prototype was constructed. The chip was finished in the later half of 1974, and was, at the time, the highest performing chip used in a consumer product.
Bushnell and Gene Lipkin, Atari’s vice-president of sales, approached toy and electronic retailers to sell Home Pong, but were rejected. Retailers felt the product was too expensive and would not interest consumers. Atari contacted Sears’ Sporting Goods department after noticing a Magnavox Odyssey advertisement in the sporting goods section of its catalog. Atari staff discussed the game with a representative, Tom Quinn, who expressed enthusiasm and offered the company an exclusive deal. Believing they could find more favorable terms elsewhere, Atari’s executives declined and continued to pursue toy retailers. In January 1975, Atari staff set up a Home Pong booth at a toy trade fair in New York City, but was unsuccessful in soliciting orders.
While at the show, they met Quinn again, and, a few days later, set up a meeting with him to obtain a sales order. In order to gain approval from the Sporting Goods department, Quinn suggested Atari demonstrate the game to executives in Chicago. Alcorn and Lipkin traveled to the Sears Tower and, despite a technical complication, obtained approval. Bushnell told Quinn he could produce 75,000 units in time for the Christmas season, however, Quinn requested double the amount. Though Bushnell knew Atari lacked the capacity to manufacture 150,000 units, he agreed. Atari acquired a new factory through funding obtained by venture capitalist Don Valentine. Supervised by Jimm Tubb, the factory fulfilled the Sears order. The first units manufactured were branded with Sears’ “Tele-Games” name. Atari later released a version under its own brand in 1976.