Intel misjudged that selling to businesses, as a processor for servers running usually Windows software, usually long-lived, special purpose, expensive, enterprise, etc. would be different from selling processors for consumer hardware like phones. There most software is mass-produced, cheap, has a short lifetime. So for the consumer, changing the architecture to something different like Arm is easier, because if fart-app #1 doesn't work, just use #2... Whereas with business purchases, the software is picked first, and the software vendor dictates the hardware, usually being very conservative and not prone to "experiments" like Itanium.

Intel misjudged both sides, for phones x86 compatibility was never necessary, for business machines, it absolutely is (for the largest number of customers, there have been exceptions).