Commodore president Jack Tramiel feared that one or more Japanese companies would introduce a consumer-oriented computer and undercut everyone's prices.

The system was designed around the TED chip which included NTSC and PAL video, sound and DRAM refresh functionality.

Though according to the designer it "was supposed to be as close to a single-chip computer as we could get in the 1980s,"[8]: 38  the CPU, RAM, ROM and some glue logic were still on their own separate chips.

Partially for cost reasons, the user port, designed for modems and other devices, was omitted from the C16 (although the connections for it were still present on the system board).

The even-less-successful Commodore 116 is functionally and technically similar but was shipped in a smaller case with a rubber chiclet keyboard and was only available in Europe.

Although shipped with 16K from the factory, it was possible to modify the C16 for 64K, making it able to run any Plus/4 software except applications that required the user port or built-in programs.

The C16 was a major failure in the U.S. and was discontinued within a year, but it sold reasonably well in Europe as a low-end game machine (over 90% of all C16 software was produced by European developers) and in Mexico as well.

Beginning in 1986, remaining C16, C116 and Plus/4 inventories were sold at a much-reduced price on the Eastern Bloc market, chiefly Hungary.

Basically, this model is the same as the American/European C16; as it doesn't have the "Ñ" key needed for writing the Spanish language, the only difference is the custom label.

All this merchandise was displayed in special modules at the electronics department called "El Universo de la Computación" (The Universe of the Computer Science).

The success of Commodore in Mexico was in granted by the fact that Aurrera Supermarket let anyone test the machines in store, so people gathered to play games and exchange programs in unofficial computer clubs.

Grupo Sigma stopped supporting the brand in mid-1993, in favor of the growing (and more profitable) IBM PC compatible market.