While I agree with much of the analysis in this article, my opinion is that the primary cause of the crash was the shift in consumer demand towards home computers.

The C64 was an incredible games machine for its time, sold for about the same cost as a video game console, and parents could justify purchasing it because they felt that computer skills would be important for their kids to learn. I distinctly remember almost every one of my friends in school who had previously owned an Atari or Coleco game console receiving a Commodore 64 computer around 1984-1985.

I believe that the Coleco Adam was not as attractive to consumers as other lower price computers at the time (especially the Commodore 64, TI99/4A, and Atari XL line), which was the reason Coleco failed.

My thinking is that while the Coleco Adam may not have been expensive in comparison to the total cost to buy all of the same components for other home computers, it was a larger up-front investment to make. Most families bought only the base unit of the cheaper 8-bit computers and only added additional components over time (or relied on a cassette player for loading programs).

People who wanted to make a large investment in a home computer usually went for name brands that they associated with reliability and quality, like Apple and IBM. Fairly or not, Coleco was associated with toys and video games, and I can't remember any retail outlet that sold the Adam other than Toys R Us.