Well the A500 was state of the art back when it came out in 1987 but waiting untill 1992 to release the A1200 was nuts. 5 Years without a major hardware update pretty much killed them.
1987 pc's were pure dos (MSDOS 3.x), and Windows 2.0 (nobody used it) just came out so the A500 was killer at the time. The processors on the pc were slow 386DX 20 processor and EGA video was the norm, 486 coming out in 1989 so the 500 is very competative.
By 1992 Microsoft had the incredably popular Windows 3.1 and Windows for workgroups that owned the buisiness market (well taking alot of it from the MAC anyway). 1992 users had pretty fast 486 machines and the Pentium 1 line came out in 1993 so by then the A1200 was pretty slow. The win3.11 craze started the ball rolling on windows video acceleration and
multimedia bringing the PC out of the stone age. 1024x768 was standard by 1993
Basically if commodore could have had the A1200 come out maybe in 1990 and flogging it as the be all end all game system (get rid of AGA and do a full VGA resolution display compatible with the 9 pin monitors of the day they would have been alot better off. Also A1200 has to be 16bit not 8bit sound. Make 1 game system 500/1200 type and 1 buisines system 2000/4000 and skip the other crap like CDTV and CD32. Dont try getting into the ccommodity x86 market either. Commodore didnt invest enough money into the hardware, the A500 was revolutionary, the A1200 was evolutionary at best (IDE 2.5" HD's was smart). You cant do a slight refresh of your main product after 5 years and expect to be competative. the only thing Amiga had going for it was being ahead of the hardware curve, they lost that in the 90's and suffered for it.