I wonder if their business case to support just such an ongoing effort counted on a stronger reception in their domestic market--there is a strong cultural affinity in Japan for robots, and crowded conditions that make pet ownership more challenging. The time the AIBO was in the market was a continuation of the austerity driven lost decade(s), with GDP growth of a little over 1% annually.

On the other hand, as demonstrated through this thread, there is little tech that Sony hasn't seen capable of messing up.