Lack of innovation?
I have one, I like it, but it's got to be something like ten years old.
They never had good market penetration in the US (were they big anywhere?), it seemed to me. They seemed to have a hard time telling people WHY they should pay more for a Katz. "Because they're a little better" wasn't enough.
I think at their price vs performance point, they're worth buying, but they aren't very convincing. If I'm going to pay more than Buck or Case, why shouldn't I get something with an Axis Lock, etc? Benchmade and Spyderco made that jump, Katz always seemed to struggle there. I don't know anyone who thinks they're BAD knives, or are THAT overpriced (although if there's an actual complaint that's it.) But I've never had guys who were totally sold on the brand telling me why I need more Katz knives, unlike the BM, Spydie, Emerson, CRK, etc fans.