I actually think it has less to do with performance problems than the significantly more complicated mental model one needs to deal with relational databases. Hierarchical files and folders are very simple.
The theory was that you would never really interact directly with the database; you'd interact with applications, which would just happen to use the database as their data store. So developers could use it to build rich interfaces that were appropriate for the tasks their app was supposed to tackle, and those interfaces would shield the user from the complexity of dealing with the database directly.
This sounds similar to the mobile approach, excepting that the underlying fs is heirarchical. Do you have any idea how this worked with paths in the terminal?
I'm not sure any of them particularly cared about the terminal. Remember, this was the '90s; all the companies that explored this (Microsoft, Apple, Be) were deeply invested in the GUI as the Future of Computing™.
