I've seen a thread elsewhere on this site that discusses the STE; however, even that doesn't really answer the one question I've always had- what was Atari's business motivation and rationale for launching the STE in the first place?
I know that an enhanced ST had apparently been in the works for a while, but by the time it came out I'm assuming it was supposed to counter the growing threat from the Amiga's recent fall in price. The problem with this- and the likely reason it completely failed in that respect- is that Atari marketed it in a short-termist way that completely destroyed any chance it had of doing this.
IMHO, Atari shot themselves in the foot by not having it directly replace the STFM at the same price point as soon as it was available in late 1989. From what I remember, initial reports seemed to think that this was indeed the plan. (#1)
However, after a while, it became clear that the STFM had not been discontinued, nor had its price been reduced- it was still the regular £299 bundle model, and IIRC the STE cost more. (Was it £399? Can't remember exactly.)
So- who exactly were Atari expecting to buy the STE? Not me; I didn't have enough money, and if I had, it's likely I'd have overcome any Atari "loyalty" (#2) and have spent it on an Amiga, which was selling for £400 by that point. (#3) And that's the problem- I assume that anyone who wasn't already a diehard ST owner would have done the same.
I've seen people in other threads here asking why there was very little support for the STE's enhanced features. It seems very simple to me- chicken and egg. No-one supported the STE features because few people owned an STE, and why bother paying more for an STE if its enhanced features weren't supported? (Especially since the Amiga already had well-supported graphics and sound if you wanted to pay more).
Had the STE completely replaced the STFM at £299 in late 1989, it would have ensured a larger base of STE models- and fewer STFMs- purely by default. This would have made it worth software houses' time to support the enhanced features. And this might have extended the ST's popularity a bit longer... if Atari hadn't been so shortsighted.
Atari seemed to think people were going to pay extra for what- in hindsight- should have been features of the base model if they hoped to see off the Amiga. Ha ha ha- no.
So... why did Atari even bother releasing the STE in the first place? What did they expect?
(Yes, I know the STE eventually replaced the STFM in mid-1991, but it was already too late by then; the Amiga had completely displaced the ST. I replaced my STFM (#3) with an Amiga- not an STE- at the end of that year).
(#1) Double-checking the Feb 1990 back issue of New Atari User- where I would have read it- confirms I'm remembering this correctly. It states that the STE had appeared unannounced in place of the STFM in existing bundles (presumably at the same price point) and that they- understandably- took this to mean that the STFM was now "gone".
(#2) Even at the time I- as an 800XL owner- realised my fanboyism had its limits. In hindsight, it's clearer that Jack Tramiel's "Atari"- and the ST which was a product of his "power without the price" vision- was philosophically very different to the "Atari" (Inc) that gave birth to the 400/800 series, but I wasn't aware of such subtleties at the time.
(#3) In fact, I'm sorry to say- with respect to the ST fans here- that I regretted my decision to buy an STFM. Even then it had clearly been overtaken by the now-affordable Amiga. I sold it just under a year later to buy an A500 Plus, and I never regretted that- the only thing I regret is not getting the machine I'd really wanted in the first place (in part because I was averse to navigating the secondhand market) and missing out on an extra year of it at the top. (#4)
(#4) Disgruntled ST owners will like the irony that when I *did* get an Amiga (Christmas 1991), it was- in hindsight- at almost the exact point its popularity had peaked, with only one way to go in the face of competition from rapidly improving PC clones on one side and the Mega Drive (and later SNES) on the other. By the following year, the focus already seemed to have moved away from it. People say technology moves fast today, but in hindsight it's clear that the ST and then Amiga each had a surprisingly short time at the top.