Honestly, I think what kills it is that it's not an Algol-descended language [1]. If Erlang was written with an Algol-esque syntax it would have taken off years ago. But instead it has this weird syntax, which it then doesn't really
do that much with. What do I mean by that? Haskell has a radically different syntax, but it
does things with that syntax and its pervasive currying to enable a powerful succinctness that one can not imagine being translated back into the Algol-esque framework. Lisp
does things with its bizarre syntax, making it obvious how to write correct macros and being homoiconic, which translates poorly back into Algol-esque infix languages. It's almost inconceivable that one could translate a concatenative program back into Algol-esque syntax [2]. But Erlang really doesn't do anything that couldn't be in Algol-esque syntax. (Near existance proof: Go. Yes, there are significant differences, but the two are inter-transliterable to a much greater degree than any pairing of any of the previous sets of language families.)
If it had an Algol syntax, and performed the SSA transform behind the scene, it would probably be very, very big now.
Bear in mind as I say this that I'm not necessarily advocating for those changes. For instance, this would require some tweaks to the semantics of pattern matching, too, which aren't necessarily for the better... in the abstract. However, they probably would be for the better in terms of usage.
I'm pretty sure Go is going to eat Erlang. Erlang programmers will 100% absolutely correctly complain that OTP can't be translated without loss into Go, and almost nobody will care. Again, I'm not necessarily advocating for this, because the Erlang advocates will be right, you just can't quite get it fully expressed in Go and that saddens me, it's just what's going to happen, I think.
In fact I'm doing it myself; the Erlang core of my system is getting pulled out and replaced by Go for a variety of reasons, and one is despite the fact my team is fairly adventurous over all, we're still better off finding people to work on Go than Erlang. (In the next couple of months I hope to release my first release of "reign", "Rewrite Erlang In Go Nicely", which brings some of the Erlang stuff into Go for the purpose of porting existing programs. I've been pulled into other fire fighting so I'm not on it this second, but I'll be getting back to it soon. That implements Erlang-like mailboxes and network clustering, and I've got a supervisor tree implementation on deck for Github too. Subscribe to https://github.com/thejerf to see when those come out in the next couple of months.)
By the way, Erlang advocates, bear in mind that trying to argue me out of this position is a waste of time. I've been programming in Erlang for 7 years now. I get the syntax just fine, even if I still don't like it. The problem is that you have to argue the greater programming community out of this position, and I don't think you have, and I really doubt you can. For better or worse, being non-Algol seems to put a hard limit on your general-purpose programming acceptance. (In my opinion, that is for the worse, but here we are. Again, please don't mistake this opinion as celebration of any of these facts. My opinion is that Erlang deserves better. My belief is that it won't get it.)
[1]: That's pretty much every modern mainstream language today: C(/++/#), Java, Python, Javascript, etc. Not all those languages come from the same semantic heritage (scripting vs. conventional OO manifest types being one big example), but they come from the same syntactic heritage. Contrast with the ML family, the Lisp family, the Prolog family (which is pretty much just Erlang now), and the Forth family for different syntactic heritages.
[2]: http://evincarofautumn.blogspot.com.es/2012/02/why-concatena...