Before their release, home computers were not great with gaming. It was possible, but the hardware was very limited. Game consoles, like the Atari 2600, had specialized chips for sound and video. The person who led this division of Atari was Jay Miner, the same person who created the Commodore Amiga 1000 a few years later. Jay developed chips which supported hardware sprites and collision detection, removing these functions from the CPU and therefor having more CPU power left to create a better game. With this, both Atari 400 and 800 were the ultimate game machines in the late 1970s. This also meant both Atari's were the first to combine a game console and a home computer.

The Atari 400 is aimed for the youth. It was a cheaper machine and a very easy cleanable keyboard. There's only one cartridge slot and if you want to add more expansion, you need to remove the whole casing, including a metal shielding (to prevent radio waves getting out of the computer). By default, it starts up with a notepad. There were games and programs available on cartridge, but also Basic. The games were mainly copies of arcade games.