They were screwed before the CD32 wasting their money on many pointless Commodore variants. C16, C128, Plus 4, CDTV, A600 and so on.
They had the most popular 8 bit computer and then the most advanced 16 bit with the A500 but the people running Commodore really didn't have a clue with what they were doing. With better leadership we could all be using Commodores to this day.
They had a once-popular, but dying 8-bit platform that they failed to further on their own (C16, +4, C128), and bought Amiga instead. Those 3 had nothing to do with the later decline. The CDTV was probably a big loss, but bad timing for release. The A600, though, was utter crap - trying to make the already low-end A500 even cheaper. Also, your statement about the A500 is wrong: the A500 was not very advanced for its time, as the A1000 seemed to kick the competition into gear years before (and the A500 was no better than, and in some ways inferior to the A1000). And no, we wouldn't be using Commodores (or Amigas) to this day, as major software vendors were abandoning it in droves before the aga models even came out. See Darklands for a game that looks and feels like an Amiga game, but wasn't released for the Amiga (supposedly because Amiga users generally didn't have hard drives, in an era where most PC users did - so much for your statement of being advanced). AGA was too little, too late. The CD32 was an unimpressive machine in an era with 3D around the corner.
Microsoft actually approached Commodore to provide the operating system for the Amiga. I can't remember the exact reason why Commodore turned them down but it was money related.
The lack of DOS and Microsoft Word and what have you is one of the reasons for Commodores failure to establish itself in the business market, which was its main target.
Source? This sounds like utter BS to me. Given that software relied heavily on its target hardware, the fact that the Amiga was completely different from PC clones means running DOS wouldn't have gained them jack. Word didn't even exist at the time the Amiga came out, and took years to become the defacto standard (and, in fact, the defacto standard of the time, Word Perfect, was ported to the Amiga, and in fact I bought a copy as part of a bundle for my A500).
As with almost all arguments about how great an OS or hardware is/isn't, it's pointless. It's all about the apps. Even claims that the Amiga was a better gaming machine are drowned out by the game developers only targeting PC clones and more popular consoles. Eventually the PC games stopped being speaker beeps and CGA/EGA graphics, and that was the end of the window for the Amiga to take over the world.
I held onto my Amiga (and 8-bit Commodores) longer than most people, so I obviously loved the machines. This distortion of facts does nobody any service, though.
Aren't you an angry individual. The A500 was a refined, more cost effective take on the A1000 which was too expensive to compete with the ST. It was also streets ahead of Atari and PCs when it was released in early 1987.
They failed to build on the superiority of their hardware leaving the door open for PCs to advance ahead of the Amiga. Yes Amiga were purchased by Commodore, I never said it wasn't.
They lost a lot of money on the C16, Plus/4 and C128 so how that didn't contribute to their decline is beyond me. They didn't just start losing money in the nineties, it was a long running problem stemming from Commodores poor decision making and lack of leadership.
They lost money on CDTV and the A600 so I don't see why you are arguing against me there.
To sum up Commodore management, Mehdi Ali.
You only have to look at how the A500 was marketed in the US where it bombed compared to the marketing strategy in the UK and Europe. Commodore International were blind to the computers gaming capabilities and instead pushed it as a business machine to compete with Apple and IBM.
They were originally approached by Microsoft to provide the operating system for the Amiga, I either read it in one of the recently released books on the Amiga or maybe it was in one of the programs that have been made about it.
I suppose I should go back and find out which one for you so that you can lose that chip from your shoulder.