It was a similar story with Word Perfect, their failure to move to a GUI basically handed MS Word market dominance. Their belated port of the DOS UI was very awkward at first, and the move to 32-bit in 95 was the final straw.
The time I saw MS Word deployed on a Xenix box it didn't work terribly well - was fine on the system console but was barely usable on serial terminals as the make of terminals (Wyse something or other) had Alt keys which did nothing. And, as far as I recall, the Alt key was pretty important in Word.
Of course, this wasn't Microsoft's fault - rather the idiotic salesman who had sold all of this without checking with anyone whether it would work or not.
Borland certainly did, but they also had plenty of bad luck.
Just as they were getting close to finishing Quattro Pro, their head offices were hit by the 1989 World Series Earthquake (they were very close to the epicenter).
Apparently, many of their computers survived the earthquake itself but were rained on by the damaged sprinkler system and covered in mushy ceiling tile debris. They commandeered a tennis court to try to dry off, clean and revive as many of the computers as they could
They did end up releasing Quattro Pro, but then were soon sued by Lotus.