As already said (in the comments) it will take more than just a few interviews to get an idea why. It's the crux of this kind of questions as there is rarely a definitive answer. Looking at the timeframe, it seems obvious: The time for a mass marketed, simple 8-bit system designed in 1982 had passed by 1991
But why was it withdrawn from the UK market so quickly?
The first question would be: Was it even marketed active - thats beyond a few adds and some shops serving a shrinking fan base?
The first guess would be: Not a viable business anymore.
Seems like it would have had more than enough customers, even in 1990; the ZX Spectrum itself was still selling well at that time.
Of course, 'well' depends much on an individual POV. At that time even the C64 was on it's way down. While there was a last surge in 1990, due to the opening of the iron curtain, with about 1 million units worldwide, it was on a decline. The C64 being without any doubt the #1 8-bit machine had already reached its end in the late 1980s.
Similar things can be said about the Spectrum itself. After all, production ended already in 1992, which is not only two years prior to the C64, but also rather short after the attempt to place the Hobbit. Unlike the latter, all production, development and marketing costs where long payed back. Despite that, Spectrums could be produced at an incredibly low price, it seems as if it wasn't worth any business anymore. Unlike that the Hobbit had a way more costly design and needed to make its inroads against super cheap sales of the genuine system.
Heck, even the SAM Coupé, introduced in 1989 as an upward path from the Spectrum ceased sales in 1992. It was much more praised than the Hobbit, still it was too late.
And it was not only technology-wise, but also on simple monetary terms. 300 GBP (~1000 Mark at that time) could buy you a basic 286 PC with 512 KiB RAM and two floppies (400 GBP with a HD) - so why paying ~150 GBP to get a a strange 64 KiB Computer with a single floppy?
The Hobbit had favourable reviews in the Your Sinclair magazine, and was briefly marketed in the UK.
Yes, in a fan magazine made to cheer Sinclair products. One that, BTW, stopped publishing shortly thereafter (1993), after being sold around 1990, probably not because being such a great investment.
Don't get me wrong, I'm not putting this down. Still such magazines are not really a measurement for success and especially not for objectivity. I like to see the various Amiga publications after 1990 as a window into a parallel world that never existed. Maybe we should not read them as computer magazines, but fantastic literature, an art form in its own right :))