When considering Nitrous as a viable business, I'd talk a lot about the "developer sophistication spectrum" and the challenges of one single product or service attempting to meet the needs of a lot of different types of developers.
On the newbie side of the spectrum, serving the hot "learn to code" market means scaling your potential market size by orders of magnitude. There is some product-market fit here as newbies don't really have substitutes ("what's a development environment?" they'd often remark), but the SaaS economics of selling tooling to newbies was atrocious.
Selling to learn-to-code means you're dealing with an incredibly fickle audience where 95% abandon their plans to become a professional programmer within a few months. The other ~5% who become full-time programmers are dedicated enough to their craft to learn about their OS and their options to customize the local development workflow. So they naturally also churn.
(I don't have any knowledge of the market, but I'd imagine courseware providers attempt to charge 100% up-front to account for the extremely high churn. At least, that's how I'd charge.)
So basically all the cloud IDEs are getting hundreds of thousands of signups from a lot of newbies saying "We love [Nitrous, Cloud9, Koding, etc...]!" but not wanting to pay for the infrastructure and churning at unsustainable rates.
On the less sophisticated side of the spectrum, I think there is potential for a viable cloud IDE business, but I think it needs to be closely coupled with a content platform like Treehouse, Coursera or CodeAcademy. I haven't looked at any of them recently, but I wouldn't be surprised if they have in-house teams working to improve the editor experience and provide stateful experiences with dedicated cloud compute & storage. We had a tightly coupled integration with the Flatiron School and it was a pretty solid experience but just wasn't a big enough business for us to scale. So in reality these businesses really just look like a content / courseware business that has a really great cloud development experience. But it's clearly built for people learning to code and they're paying for the courseware, not for the editor.
As you move up the sophistication spectrum, developers begin to experience "cognitive dissonance" when considering how much their time is really worth. That is, when they know how to setup, configure or troubleshoot something themselves, they underestimate the time they spend every month performing those tasks. We spent a ton of time doing deep customer research with excellent engineering teams at Airbnb, LinkedIn, Shopify, etc... You'd be extremely surprised at just how much time it takes for the average developer at a top-tier engineering org -- in some cases, new developers took 3-4 weeks to setup their dev environment. But after setting up a new environment the other dev ops problems start to spider into a web of complex and proprietary issues that are difficult to create compelling marketing / sales presentations. It's like - everyone knows it sucks and it's broken, but nobody quite knows the solution. Which is why a lot of the solutions emerge from open source projects that solve specific issues organically and then expand into powerful platforms that cohesively solve a set of interesting ops problems (e.g. Hashicorp).
This is an oversimplification of the complexities of the developer market - as there is also a spectrum of sophistication within the professional developer market itself. The "intermediate" professional developer tends to be the best market fit right now for cloud development / IDEs, as they often are self-taught and know how to code, but are often not as versed in debugging low-level issues, but usually are more price sensitive to their more sophisticated counterparts (who don't want to use the service in the first place).
In any case, I remember reading a HN comment about the nitrous.io shutdown  and feeling bad about not opening up more so I suppose this will provide some color. People loved our service and we honestly loved building it, but business is hard and we weren't able to uncover the right strategic focus. Hopefully Coursera, Treehouse, CodeAcademy, etc... will continue to fill in the gaps for the beginner market - but since those will be tightly coupled with their courseware, it's going to be a difficult spot to be in for the independent educator who is attempting to monetize their own material.
"As you move up the sophistication spectrum, developers begin to experience "cognitive dissonance" when considering how much their time is really worth."
I am pretty sure that one of the reasons why cloud IDEs have struggled is that plenty of professional developers consider that learning an IDE or editor is a time investment that pays returns over a long period of time. On the extreme end of the scale, I still get near-daily use from the Vim knowledge that I picked up well over a decade ago. Investing personal time learning a cloud IDE may not be such a good investment, because those skills can be invalidated at any time.
There's definitely a lot of potential innovation that can be done in developer collaboration and environment setup, but I don't think that a proprietary system will get the widespread adoption needed to move the industry forward.