Warner Atari had left an enormous amount inventory behind. (Beyond what they infamously put into a landfill.) They also had screwed-over the major chain stores, who wouldn't touch anything Atari.
Tramiel was cash poor and resurrected the 7800/2600jr/XEGS/etc just as way to keep the lights on selling old stuff as they launched the ST computer line. It wasn't really intended to be competitive, and was sold cheaply through second-tier outlets.
(There was actually still tons of classic inventory when Tramiel Atari went under.)
That doesn’t surprise me. I know he was a “screw over anything if it will make the computers 0.05% more popular” guy. That was all that ever mattered in his mind.
Tramiel was cash poor and resurrected the 7800/2600jr/XEGS/etc just as way to keep the lights on selling old stuff as they launched the ST computer line. It wasn't really intended to be competitive, and was sold cheaply through second-tier outlets.
(There was actually still tons of classic inventory when Tramiel Atari went under.)