While it might have failed in the long term anyway, Multics didn't fail because of market reasons. It failed because first, Honeywell was incompetent at developing serious hardware, e.g. officially blaming the failure of the first (and only, I guess) clean slate Multics CPU project on the decision to microcode the machine. Something which IBM had previously used in the System/360 to dominate the market....

That caused more and more problems as its async CPUs fell further and further behind, although this was still in the discrete logic days, and you could easily use up to 6 in a configuration, and more with a kludge. But it was still selling well, especially in France, where Bull seriously pushed it.

Then it was deliberately killed off due to internal politics, it seems that trying to smash together three computer companies, Honeywell's original stuff, GE's including Multics, and SDS -> Xerox -> Honeywell, creates a situation where killing off rival systems makes sense to political winners who just might not be technological winners.

That Multics was doomed by all this was self-evident to me in the 1979, one reason I never spent any serious time on it.