Acorn went down for a simple reason - they sucked at business.
Designing their own hardware was actually part their downfall. A company with such a small market was never going to survive by designing everything themselves when far cheaper and more powerful components were available. What Acorn designed was often superiour to what was available but unfortunately at a heavy cost.
If Acorn had decided sooner to start implementing stuff like PCI, even AGP (if technically possible) maybe the Phoebe would have been a more realistic goal. Acorn would never have had a chance designing graphic chips up against the likes of ATI and nVidia today. Better to use them than to chase with them on chip design.
Far to much off-the-shelf stuff was being redesigned by Acorn instead of just using what others had already created and were selling for maybe a quarter of the price Acorn could ever dream of getting their stuff for. Sometimes the off-the-shelf stuff was even far superiour to what Acorn created, some simply just more readily available.
At a time it seemed that Acorn wouldn't have been able to sell a winter jacket on the North Pole - even if it was full of castaways from Ibiza because they didn't believe it was their target group!