The name Infocom comes from their desire to make business software. To a large extent they considered games that they had written in the past to be a way to raise money so they could afford to make the business software that would make them rich. Games were always a distraction in their eye - a profitable one, but not their purpose. As far as I know they never got anywhere with business software...
I realize. Still doesn't mean I can't lament them for not realizing they were already successful and could continue to be. Just imagine if BioWare had kept trying to make medical software despite the success of their RPGs, just because their name said they should.
The Infocom brand and creative team outlived their failed business software division, but couldn't survive the tension of being acquired by a games company that wanted to churn out more content. It's possible the company regarding the games division as a side project to raise seed money rather than a cash cow actually indirectly helped the creative side...
(Either way, I think it'd have struggled to survive the emergence of story-driven games with good graphics. There's plenty of comparatively well-written and user-friendly modern IF which only reaches niche audiences despite it being freely available and publicised across the internet )
Infocom was experimenting with graphic adventures towards the end. (Zork Zero was a fascinating experiment. Maybe not a successful or entirely enjoyable one, but something with possibility.)
It's impossible to say how well Infocom might have done as graphics continued to take focus. The diaspora of Infocom's creative talent worked on many well-beloved graphic adventure games (Moriarty's LOOM and influence on other LucasArts games, Meretsky's The Space Bar and influence as a consultant to a variety of game companies in roughly the same time span, as two examples quickest to mind).
They still probably wouldn't have survived the "adventure game" crash that eventually broke Sierra and LucasArts, but it's interesting to wonder what sort of a contender they might have been had they not been forced to sell to Activision (or had they stumbled into selling to a publisher that was a better fit creatively).
Anyway, its interesting to armchair quarterback with decades of hindsight. The business software was a technical marvel of a sort and potentially had it been much better timed and budgeted it could have eaten Lotus and Excel's lunch. Maybe there's an alternate universe where we are all using an Infocom office suite and Infocom operating system on hardware Z-Machines, which is a fun idea to think about.
This is a highly detailed and interesting story about what happened to the sequel. This article is almost as amazing as the original post!
Also... am I the only one who finds it amusing that essentially 'Bureaucracy' led to the demise of the Hitchhiker's Guide to the Galaxy sequel? Makes me wonder if Douglas Adams specifically avoided working on the sequel just so that could be the case...