The Commodore 128 is the last 8-bit home computer that was commercially released by Commodore Business Machines (CBM). Introduced in January 1985 at the Consumer Electronics Show (CES) in Las Vegas, it appeared three years after its predecessor, the bestselling Commodore 64. The platform is also known as the C128, C-128, C=128, or occasionally CBM 128.
The C128 is a significantly expanded successor to the C64, with nearly full compatibility. A Zilog Z80 CPU allows the C128 to run CP/M, as an alternative to the usual Commodore BASIC environment. The presence of the Z80 and the huge CP/M software library it brings, coupled with the C64's software library, gives the C128 one of the broadest ranges of available software among its competitors.
The C128's complex architecture includes four differently accessed kinds of RAM, two or three CPUs, and two different video chips for its various operational modes.
The C128 has three operating modes. C128 Mode (native mode) runs at 1 or 2 MHz with the 8502 CPU and has both 40- and 80-column text modes available. CP/M Mode uses both the Z80 and the 8502 and is able to function in both 40- or 80-column text mode. C64 Mode is nearly 100 percent compatible with the earlier computer. Selection of these modes is implemented via the Z80 chip. The Z80 controls the bus on initial boot-up and checks to see if there is a CP/M disk in the drive, if there are any C64/C128 cartridges present, and if the Commodore key (which serves as the C64-mode selector) is being depressed on boot-up. Based on these conditions, it will switch to the appropriate mode of operation.
Market Performance and Software Library
Because the C128 would run virtually all C64 software, and because the next-generation 32/16-bit home computers—primarily the Commodore Amiga and Atari ST—represented the latest technology, relatively little software for the C128's native mode appeared (probably on the order of 100–200 commercial titles, plus the usual share of public domain and magazine type-in programs), leading some users to regret their purchase. While the C128 sold a total number of 4 million units between 1985 and 1989, its popularity paled in comparison to that of its predecessor. One explanation may be found in the fact that the C64 sold huge numbers to people primarily interested in video games, which the more expensive C128 didn't add much value towards improving. This has also been blamed on the lack of native software and on Commodore's less-aggressive marketing, which was mostly focused on the Amiga by this time.
Although the C64 software library provided the primary source of games for the C128, there were a number of games that were released specifically for the platform. Some Infocom text adventures took advantage of the 80-column screen and increased memory capacity. Some C64 games were ported to native mode like Kikstart 2 and The Last V8 from Mastertronic, which had separate C128 versions, and Ultima V: Warriors of Destiny from Origin Systems, which used extra RAM for music if running on the C128. Bard's Tale III and Kid Niki ran in 128 mode without stating this in the documentation, using the autoboot and the 1571's faster disk access. Star Fleet I: The War Begins from Interstel had a separate C128 version, and took advantage of 80-column display on the C128. The vast majority of games simply ran in C64 mode.
Source: Wikipedia, "Commodore 128", available under the CC-BY-SA License.