I suspect you're right that under different stewardship Emacs could have taken over the wold. And who knows, if they cared to run usability studies on the initial user experience it might still be possible.
> This is just admitting defeat
If you assume that everyone values popularity or ease-of-use then this is a reasonable conclusion.
But if you'd forgive some unsolicited advice: assuming everyone shares your values will make it hard to understand or predict other people's actions which will hinder your attempts to communicate, negotiate, or manage anyone not like you. It may be simpler to imagine they're crazy, foolish, or deluded but personally I've found it useful to operate under the assumption that their values are real and just as valid as mine.