With the success of the 400 and 800 machines Atari kind of sat on its laurels for a bit longer than it should've done, and once the likes of Commodore started with the super-expandable (it says here) Vic-20/C64 and Sinclair was up and running with the ZX80 they decided to pull their corporate fingers out and come up with a new line of sleek, modern 8-bit machines.
Unfortunately for them, the machine they came up with was the 1200XL. Yes it was sleek and modern, it has a fantastic keyboard (best of all Atari machines I reckon), it was nicely designed in that all the wires now connect at the back and there was a single board inside for lower manufacturing costs....but......it's design was broken in that its new features were partially at the expense of the 3rd and 4th joystick ports found on the older machines. This broke a lot of games that relied on a hardware detection of those ports - they refused to run.
On top of that, the system was completely unexpandable by the average home user - no real easy way to add extra memory like slotting in another RAM card in the 800, no external bus connection for new hardware and despite the newer graphics hardware the picture quality was worse than the 800! Doh! I think Commodore followed identical thinking when they were creating their wholly non-expandable PC-I
The machine was so unpopular it never got released in Europe and was only sold in the US for a matter of months - the 600XL and 800XL were hot on its tail and quickly proved to be successes. There actually should've been another machine after these - the 1400XL - but sadly it never really got past pre-production before Atari crashed most foul to be bought by the Tramiel family. There are some out there however, and there are even some 1450XLDs, which are 1400XLs with a single 360K floppy drive in the case.
This machine I got cheap because the seller said it had a dodgy TV out, but after hooking it up to the NTSC compatible TV card in the machine I'm typing on now it came to life nicely, as you can see in the pix. The wavyness of the display is more down to the TV card than anything else, I think.