1 - in those days executives, and even other white collar “professionals”, typically male, didn’t type. They had secretaries who took dictation, typed things up, made corrections, and then used, Xerox photocopiers to make copies which would be distributed. So the use case wasn't clear.
2 - for all of those reasons they probably looked at specs (screen? Yep. keyboard? Yep. Network? What's that?) and thought they were making a shrewd decision. And perhaps they were: nobody even knew they needed a WYSIWYG editor much less mail (and this was Xerox, a paper management company -- why would they embrace electronic mail?). Microsoft swooped up Simonyi and he rewrote his Bravo editor as the original version of Word (the only part of office originally written by Microsoft?). The Alto wasn't as expensive as the later Star (also a failure) but I think each one cost about 10K in 1980 dollars.
As far as I know the only Altos and Dovers outside PARC were MIT, Stanford and the White House. Probably CMU too.