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.