Article author and submitter here.
I think that is a mistaken assumption. You have an effect, and you have a cause, but they are largely unrelated.
No, it didn't have preemption, or memory protection, early on, but that didn't matter because it was a file server and basically only a file server.
The Netware kernel was by and large a single binary running on a single core because that's all CPUs and PCs had then. It only did one job: reading stuff from data, sending it over the network, accepting stuff back and writing it.
It doesn't matter if you don't have memory protection if you only have one task. It doesn't matter if you can't preempt when there is only one thread.
When Netware was at its peak, it was the fastest fileserver there was, by quite a big margin, and that's all that mattered, because the apps executed on the client machines, not on the server.
I put in lots of Netware boxes and all they ran was Netware itself and nothing else. That's what it was for and what it was good at and all that I ever added anywhere was an on-server backup/restore tool, at the most.
Servers were not connected to the internet, and couldn't be, because Netware didn't include or use TCP/IP in the early days. They didn't route anything anywhere. There was nowhere to route it to or from, except other Netware servers on the same LAN.
They didn't have the killer feature you cite because there was no use for it.
I know that there were email servers -- that's where Pegasus got started. I know some people ran databases on it. I dealt with hundreds of clients from dozens of companies at 4-5 different employers and I never saw a single on-server app of any kind. No email, no databases, nothing.
It was a thing but not mainstream.
But when Windows NT came along, suddenly here was an OS that could be a stable file/print server and run apps as well.
You're saying that the world's best-selling bicycle lost out to motorcycles because it didn't have an engine. When it was the best-selling bicycle, motorcycles didn't exist yet. So it's true but it's not the cause. Motorbikes came along and allowed people to do a lot more stuff but bicycles still sell very well... without their engines.
What happened is that at Netware 4.x took over, Internet adoption spread at the same time. Suddenly ordinary small businesses wanted an email server, or a proxy server, and Novell did that -- for a price -- and they wanted it on the same expensive box.
And it wasn't very good at that. Then it became a problem, yes. But NT was doing well by then, it was a bit cheaper, client licenses were a bit cheaper, but more importantly, as others point out, NT didn't enforce client limitations whereas Netware did... and Netware was hard, while NT was easy.
So NT stole Netware's market out from under it.
Around the same time, the poor support for server apps became an issue. As did the difficulty of developing them.
Netware 4 let you push server apps out to a protection ring outside the kernel's Ring 0, but it cost performance. It did support some levels of protection but that was not the key thing.
NT was cheaper, easier, and while slower, ran server apps with aplomb. Even if Netware had been better at it, that wouldn't have saved it. It would still have been harder, meaning it required more skill of admins and developers... and it would still have been more expensive.
So, you're right, it was an issue -- but I think it was not actually a make-it-or-break it issue.
NDS made life hard for small businesses, who didn't want it or need it. An enterprise feature foisted onto SMEs.
And a new competitor, who was better in ways much more important than the ways it was weaker.