1) Management "bet the farm" on CD32.
2) XOR patent infringement claims killed CD32.
3) The failure of the CD32 product was the last nail in the coffin.
Tragic. I loved my Amiga 500 dearly. It makes one wonder what might have happened if Commodore could have held on for a few more years and (perhaps under new management) ridden the wave of internet-driven hardware sales to new heights.
Or this oddity, the A2024 with a 10hz-15hz refresh rate: http://www.amiga-hardware.com/showhardware.cgi?HARDID=863
Worked a treat!
That's not really the case. It was designed with computer graphics in mind - far more akin to a workstation than a game system. It was always intended as a full fledged computer as indicated by a multi-tasking operating system and peripherals such as the sidecar for the A1000 and the bridgeboard for the A2000. Standard serial and Centronics ports are further evidence of Commodore's intent.
Using standard video timing and providing stereo sound created significant benefits for audio visual applications - and in true Commodore tradition - the video system allowed the Amiga's to be used with a television as the monitor and reduced thereby reduced the cost of a basic system.
It's such a shame. Commodore made great computers.
The Amiga had sort of an identity problem. It was born a videogame console and NTSC timing was pervasive throughout the system and that made the design more complex as the machines evolved. They should have gotten rid of that as soon as they launched their second-generation machines.