Programs for small computers were generally stored on cassette tape, disk or paper tape. By the early 1970s, Hewlett Packard manufactured desktop computers costing thousands of dollars such as the HP 9830, which packaged Read Only Memory (ROM) into removable cartridges to add special programming features, and these were being considered for use in games. At first, the design was not going to be cartridge-based, but after seeing a "fake" cartridge system on another machine, they realized they could place the games on cartridges essentially for the price of the connector and packaging.
In August 1976, Fairchild Semiconductor released their own CPU-based system, the Video Entertainment System. Stella was still not ready for production, but it was clear that it needed to be before there were a number of "me too" products filling up the market—which had happened after they released Pong. Atari Inc. simply did not have the cash flow to complete the system quickly, given that sales of their own Pong systems were cooling. Nolan Bushnell eventually turned to Warner Communications, and sold the company to them in 1976 for US$28 million on the promise that Stella would be produced as soon as possible.
Key to the eventual success of the machine was the hiring of Jay Miner, a chip designer who managed to squeeze an entire breadboard of equipment making up the TIA into a single chip. Once that was completed and debugged, the system was ready for shipping. By the time it was released in 1977, the development had cost about US$100 million.