Well, I'd say more the middle road won here; the high end was not PCs, but (UNIX) workstations. IBM PC was after all contemporary to SGI IRIX, SUN-1 (and -2), and Apollo computers.
Shiraz Shivji from both the C64 and the Commodore 900 team ended up leaving with Tramiel when he bought the corpse of Atari. He ended up being the architect of the Atari ST.
IBM clones transformed the market because the PC standard (with MS-DOS) became a commodity, which meant you could swap software and data between machines from different manufacturers and Compaq made sure could buy the hardware via a network of dealers, like a car - something Apple originally innovated, and the S100 scene experimented with, but never quite mastered.
The compatibility was a Really Big Deal at the time. It was far more important to users than the very obvious technical limitations of the hardware. Not only could you share data, but you could take your disks to a different office with different hardware from a different clone maker and still get work done.
Incidentally, Unix would never have happened in this market because the shell syntax (all of them...) is far too hostile for most users.
Lotus 123 was released in 1983 and was already dominating by the end of the year.
The C64 wasn't released until late 1982, a year after the IBM PC, and visicalc on a 64K machine can't compete with 123 on a 512K machine.
To "beat" the IBM PC, I'm talking about a high-mem PET-compatible computer in a Vic-20/C64 type time frame. Imagine a Commodore that has 3 models: a vic-20 comparable, a c64 comparable and a $3000 model that supports up to 1Meg of RAM. All 3 models backwards-compatible with the PET and each other. In the 1980-1982 time frame.
Commodore won the low end in the early 80's, but gave up the high end. And Moore's law ensured that the high end destroyed the low end over time.