A 7501 processor was used, which is compatible with the 6502. In addition, the SID and VIC were replaced by a single chip called TED. A real 'computer on a chip'.

The TED was able to show 121 colors, but had a less good sound compared to the SID.

Together with the Commodore 16 and the Commodore Plus / 4, it belongs to the Commodore 264 series. The Commodore 116 and Commodore 16 are identical, except for different cabinets. The 116 is exclusive to Europe. This served as a replacement for the already outdated Commodore VIC-20.

The C16 is not very successful and disappeared from the American market after only a year. In Europe and Mexico, it has had some success as a budget gaming machine.