Commodore 64 was still selling very well in '89 (1.5 million in '88 - I don't know specific numbers for '89), and continued selling well enough that Commodore kept manufacturing them right up until their bankruptcy in 1994.

You can say a lot - mostly bad - things about Commodore management, but they had actual hard sales numbers that demonstrated that there still was a market for a really cheap entry-level computer in 1989.

Their big problem was figuring out what to do in that space.