My guess is the margins were really bad for a PaaS. It's expensive to build on top of other people's clouds.
There's also the issue that building an effective enterprise sales organisation is a whole Thing and if you believe you can achieve profitability via a different path then the temptation to file the enterprise approach under "I have no idea how to do this and also I would rather not" is probably pretty strong.
(this is in no way a comment about what the right decision would have been, only musing on an additional reason the decision might have gone the way it did)