This might be an anecdote, but I am an avid consumer of e-reader-like products, and me not having bought (even though having had researched thoroughly) any pixel QI products has nothing to do with Kindle. I have bought 8 e-readers during the years and none of them were Kindle. In this year it is so easy to do research about any available products, and order any available products, that it is hard to compete only by brand name.

You talk about price point, but Notion Ink was not even that expensive. If you compare it to other options at the time there was some small premium for the new screen, but it didn't even register for me as a factor when choosing what to buy.

The problem as I see it is:
1) Pixel QI has worse parameters (brightness/contrast levels) in the e-ink mode. The existing screens already have problems with brightness. They don't really look like good ink on good paper, the contrast is lower. This one looked (at least in all the marketing materials) like it has even lower brightness, it would be even harder to read from it.
This might have been a quirk of bad marketing? Sure, I don't really care. If they can't show me why the screen would be better, how do they expect me to buy it?

If you buy an e-reader, you want the e-ink mode to be superior, not the other way around. That's the reason you buy the device, for e-ink mode. Pixel QI wanted me to buy an e-ink screen, but sacrificing e-ink experience...

1.2) As a consequence of the screen technology, any Pixel QI device would have a much worse battery time than an e-ink, so that's another advantage of an e-reader gone.

2) There is really no need/ no use cases (for the average consumer, but since we are taking big markets, that's what matters) - for the screen that can do both modes, but does the e-reader mode poorly.
Do you want to read in poor lighting conditions? There are alreay e-readers with backlit displays or just lamps... Which is better for the eyes anyway, it's not even that comfortable to read from a brightly lit screen in a dark room.

3) Existing e-ink screen can already be used with for example android and other apps. IT doesn't just have to be books. They are monochrome ofcourse, and you have to be a little finicky in certain apps, and you can't watch videos, but aside from that they are actually quite useful. This is the setup I have right now. I can read books, but also use most other static-screen apps like calendar, browser, audiobook etc.

4) (minor one) The original product with this screen (notion ink) went too heavily on new untested software (they made a completely different type of interface, with completely new workflows, which to me looked really questionable in terms of usability at all - and even if they would show up as being useful - I would not trust such a small company, which already undertakes a huge task of delivering the first Pixel QI product, to also simultaneously focus on creating a new type of interface, supporting it, polishing it, etc. It's not an easy task.) Android was already under way back then, I just wanted an android box!

Basically they tried to position themselves as a "standard ereader killer" ("kindle killer"), but the most annoying feature of Kindle is its closed garden of apps and proprietary formats. And what would be the point of Notion Ink if it would be just another closed garden?