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I believe this is also partly why the early Apple computers cost much more than the equivalent IBM PC/XT/AT --- the latter did not make use of custom chip designs, instead using standard off-the-shelf parts. (This also made them easier to clone... and the rest is history.)

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I think Atari's 8-bit line proves this to be wrong. The Apple II was priced much higher than it needed to be. Even with the Apple II, Apple was more interested in profit margin than market share. Commodore lost its market share to the IBM PC, not Apple who had already lost the lead.

None of the other 6502 machines could compete with Commodore in a price war because Commodore owned MOS technologies. The C64 was all custom chips, which is why it was much cheaper than other machines with similar capability. Apple may have been able to drop the price but they were never going to get down to VIC 20 and C64 prices.

Commodore failed to invest in R&D so by the time the AGA Amiga's came out they had to outsource the fabrication and it ballooned their costs.

Commodore had all sorts of problems particularly after Tramiel left / ousted. Atari actually kept within range of the 8-bit pricing of Commodore and had a much better set of custom chips.

Apple might have never been able to get to C64 prices but they sure could have dropped enough to get well clear of IBM. Regardless, its was Commodore's market share to lose not Apple's.

The Atari had:

An inferior sound chip

Bigger pallets but with fewer colors per cell

Tiny sprites

If anything the custom chips of the C64 and the Atari 8-bit line are about equal, each taking different trade offs.

I find it hard to believe that the Commodore 8-bit line would be competing w/ the IBM PC in any real sense. The natural upgrade path from a Commodore 8-bit was an Atari ST or Amiga, not an IBM PC.

Well, market share wise it was the leader when IBM brought the PC out in 81. IBM even straddled the whole 8-bit / 16-bit line with the 8088 instead of the 8086[1]. It was Commodore's game to lose and they didn't move into the 16 or 32-bit eras with a machine that stayed in the price range they had carved out. Both Commodore and Atari went for the $800 (ST) to $1,300 (Amiga) mark for their next generation, and Apple decided $2,495 was a great idea.

Heck, Commodore's sequel to the C64 known as the C128 coupled the 8502 (better 6510 which was a better 6502) with another 8-bit chip in the Z80. They built a Frankenstein and not a natural upgrade.

1) a curse on all those that prevented IBM from using the 68000. Sure, use the 68000 in something that's supposed to act like a 370 but not in the PC where it would have saved us all a whole lot of crap.

The point of that Z80 chip was to support the CP/M platform, which was used for a lot of business and utility software pre-IBM PC. So, I'm not sure why you think that coupling the two was a bad idea.

Because it was an 8-bit chip with no future in 1985 and CP/M was pretty much dead. Two 8-bit chips was just a bad idea.

A lot of Commodore users switched to the IBM PC because they wanted the same machine at home and at work. My father, for example, picked up an IBM XT but later also bought an Amiga as a second computer because the XT never really replaced the Commodore. It just allowed him to work at home.

In the 1980s custom ASICs were not expensive at all. Apple was able to reduce the cost of Apple ][s and Macs by replacing a bunch of off-the-shelf chips with a single custom ASIC.

If I had to guess, the Mac was more expensive than a PC simply because it did more (e.g. graphics and sound).

Also the price of RAM dropping nearly tenfold from 1977 to 1981.

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