For context, while we we working on 4.x I recall Norm Bartek having a crack at installing one of the early Windows NT 3.1 beta releases on one of the beefiest machines we had in the office. After grinding over half the day copy stuff to the install partition, then when it went to actually boot it just bluescreened because the machine had "only" 12Mb of RAM (which was the minimum spec for release NT 3.1, but the betas were built in debug mode and so needed more).
There was a big gap between what the "workstation" folks thought PC hardware was like and the reality of what most people could actually afford, hence why the minimum spec target for Windows 95 - a couple years later! - was still only down around 4Mb, even though that still tended to page hard.
So, for us, although it sometimes took fairly heroic efforts in size-coding, by keeping everything we possibly could still as 16-bit, our install floppy was actually a fully live system, without any tricks like compressed filesystems expanded to RAMdisk or anything. You booted off the install floppy to the 32-bit kernel, with the regular init and login and /bin/sh and everything - the installer was a shell script that just helped walk through fdisk and mkfs and then did an untar of the remaining stuff on later floppies (with things like the C compiler and libs) but right from the install floppy you could quit (or Alt-F2 to an alternate console TTY) to a root shell and have a usable system that happily ran in 1Mb of RAM.
So, there was still a niche for Coherent (and similarly, QNX), albeit that it wasn't a large enough one to bridge it through the growing pains of the changes at the time, especially given the forces that would shortly wipe out AT&T and DEC and almost all the other UNIX vendors despite their size.
It's interesting, given what I then went on to, to compare that niche to some of the customer response to Ghost. Even well after 2005 we had plenty of paying customers there who absolutely clung to being able to build and boot to DOS via floppies, even though we did have to use the RAMdisk trick once the UPX-packed Ghost binary exceeded about 2Mb by itself (a lot of which was due to a mistake I told the other devs not to make around the time Symantec acquired it, which was to rely on C++ exception handling; alas after several years, something like about 40% of the size of the binary was just GCC's exception metadata).