Why C= never made a 65816 based machine?

[mongo]

Commodore couldn't have managed their way out of a hat.

Content to sit back on their money earners, they stopped innovating and, surprise surprise, a few years later they were bust.

Just this morning I was thinking that C= should have reduced the C64 to a single chip (including the VICII,SID,6502,Serial,etc) by the late 80s so that they could sell it for cheap in developing countries for a profit. It could also have been clocked higher because said chip would have been fabricated on a far more modern process than the original C64. Your idea of using the 65816 is similar. An enhanced C64 for the late 80s/early 90s, with the C64's flaws (relatively slow CPU, mud-inspired colour palette) designed out.

By the late 80s the production cost of the C-64 was about $25. It wasn't going to get much cheaper than that. Clocking it higher would have caused a ton of the software for it to not work and screwed up the video timing.

[mongo]

Remember what Sega did with the Genesis?  They released a converter for Sega Master System games.  That's exactly what Atari and Commodore should have done for their 16/32 bit machines.  Just supply some 5.25" floppy drive that had some hardware in it for emulation.  Would have been a killer product and allowed established software categories to be utilized on newer systems.

The "some hardware in it for emulation" would have had to consist of pretty much a complete C-64 and 1541.

Sega's Power Base Converter for the Genesis was just an adapter that allowed the different sized Master System cartridges to plug into a Genesis. There was no emulation involved because the Genesis contains the full hardware of the Master System.