It was used in academia although it did appear elsewhere for instance in some PLC applications, for a long while some supertankers were running PS/2s with Optio22 I/O boards to control pumps and whatnot.
I have seen the media kits in person recently. They comically come with an “action” key cap for your Model M. I have a picture of interested.
I don’t think the lack of popularity was any conspiracy. SCO had much better ISV and hardware support for PS/2. And if you had a nickel for a real computer there’s a reason the RS/6000 platform and AIX are still around today, it’s not bad stuff despite being a bit different and foreign.
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When confronted by a difficult problem, solve it by reducing it to the
question, "How would the Lone Ranger handle this?"