The Atari 7800 was released in 1986 at a price point of $140. It was meant to compete with Colecovision, who was on the cutting edge as far as better emulating real arcade games. It had a lot going for it, especially considering it was backwards compatible with Atari 2600 games and be converted into a home PC (complete with keyboard).
By 1987, the Nintendo Entertainment System was dominating the market, and the Atari 7800 fell in the shadows. Nevertheless, the 7800 did turn a profit for Atari, unlike the 5200. In the mid 2000's, an Atari Flashback version of the 7800 was released, which made for great, nostalgic fun. Pictured above is the Atari 7800 version of Pole Position, which when compared to the screen shots of Pole Position for the 2600 and 5200, was a great improvement.