Companies who are building similar products aren't using Home Server, instead opting for unknown faceless software.
Acer, HP, Asus, VIA and Lenovo are all using WHS for their Time Capsule-like solution. And then there's some smaller outfits like Tranquil.
No idea if it was a commercial failure. Seeing how they're making a new version (it's in beta), it can't have been that bad. I just wish they hadn't botched up the whole reliability thing at launch and then waited a year or so to patch it.