I don't think the problems were particularly insurmountable; with the advantage they had, they could have redesigned everything twice over and still be competit

I don't think the problems were particularly insurmountable; with the advantage they had, they could have redesigned everything twice over and still be competitive (which tbf they did, to an extent: the CD32 stuff they pushed towards the end was pretty cool). It's just that Commodore leadership was fundamentally extractive, and saw personal computers more as consumer widgets than platforms. The financial side of things was a bit shambolic, and they trusted the wrong money.