spot on with the 'head of a pin' 
As for some of the arguments on here, they date from the actual era- not hindsight, and some from the engineers on the ground at the time.
The PC did not move that fast, anything it did, commodore could have bought off the peg as well. And moore's law was a known quantity.
It's more to do with faults at commodore's end (and atari before them) than the superfast PC dev. Besides, consoles had as much as an impact, if not more.
Sure, some of these responses are just blowing smoke...but I smoke, so that's fine!
Not to be argumentative, but...
As the PC industry began to specialize, it did move faster and faster. Graphics card development accelerated when certain companies made it their sole focus. Commodore, on the other hand, simply tried to do everything at once. Not a good strategy back then or even now. Which is why my suggestion was that it split off Amiga graphics into a specialized company.
And, with regards to Moore's law, I said "nobody _fully appreciated it_ back then." In other words, I was referring to the fact that Commodore didn't fully appreciate it, so instead of focusing on where they had the advantage (graphics) they tried to do everything.
Not claiming your points are invalid, just wanted to point that out.
Super off-topic: I notice your from Northhampton, UK. I've been to that part of the world. Beautiful country.
