They couldn't compete because the company was horrible run. They basically relied on chips designs from the early 1980s until 1992. They did almost nothing to improve the product line while their CEO earn a huge amount. They fired the only decent CEO they had.

Had the taken some money in hand and all-in-one Amiga 500 SoC that had some sales potential left, and combined that with a next generation chip set that could run the modern games of the early 90s I think you would have had a great product.

And Windows wasn't really actually good at all the games media stuff for a long time. I think the home market for that stuff was possible if somebody grabbed it along with continuing some higher level unix, video, audio workstations.

And many people who had one liked it and grew up with it. There was a market there. Many switched to PC simply because the product was no longer competitive. Many had grown up with the Amiga 500 and were ready for an upgrade.

If you look at what Acorn achieved with even fewer resources and a much worse market position. Imagine and ARM chip with modern chipset but Amiga 500 compatible. Maybe along with non-backwards compatible console version like the CD32.

Would it have been a hyper-growth company, I don't really think so, but survive for the rest of the 90s was possible.