Desktop Java also had many other problems, which can be summarised as "the JVM is its own OS". You can't write an application in Java that has a native look and feel. Or at least you couldn't for the first several significant years of its life and even now I don't think there's a good story for writing a simple native application. Meanwhile you could grab wxWidgets or Qt (and there goes your budget for a java compiler) and have a native-looking cross-platform application. Which very few did, because back then Mac OSX didn't exist, Apple were on their death bed and "Linux Desktop Environment" was even more of a joke than it is today.
So yeah, it didn't make any bit of sense to develop Java desktop apps given that you already had a large pool of proficient C++ developers, the only platform you cared about was Windows and Java GUI libraries insisted on reinventing their own look and feel. Oh and you could always just buy Delphi if you didn't want to suffer C++ (again, for a fraction of the price of a commercial Java compiler).
Nowadays people wrap a bunch of javascript in an electron instance, but this only happened after the web took off and nobody really looks at native desktop apps much. If this AOT work can give us fully contained native executables that we can distribute without having the user install Java and with significantly better performance than nodejs, maybe Java on the desktop can still happen.