It's funny thinking back to the hype cycle of Itanium back in the heady days where performance was doubling every year, desktop was king and this was the future . Turns out it was more like IBM's MCA / PS2 rather than the future. Compatibility and ubiquity wins. As nearly always.
I’m not particularly confused about Intel’s perspective on compatibility: Even at the time, there were several examples of successful platform CPU transitions across architectural “full breaks”. Apple going from 68k to PowerPC is the closest analogy for Intel, and if the Itanium performance and software (compiler) story had played out as Intel envisioned they likely would have been fine.
But as for ubiquity, I’m befuddled. As far as I’ve been able to determine—having lived through it and followed many retrospective threads like this looking for new evidence—Intel had no plans on any useful timeline to turn Itanium into a (non-workstation) desktop or laptop chip. Did they really think the market would stay bifurcated between “big iron” architectures and x86 personal machines for another decade? I can’t imagine they would have believed that.