Colt underwent a number of reorganizations and changes of management after WWII, but all seemed to have one thing in common - they always seemed to miss the market. They dropped the SAA after WWII, just before the first "cowboy" craze hit. Ruger made money by getting out an advanced design. Colt abandoned plans for a .44 Magnum, just as the "Dirty Harry" movies took off. S&W made tons of money; Colt got nothing. Colt threw money at a 9mm pistol that was just plain no good; they lost, big time. They bought and produced a DA pistol that was at best mediocre; they lost money on that. And they were always a big step behind other companies, domestic and foreign.
Colt knew about polymer frames; they could have had the Glock market, but chose to stick with versions of the 1911.
By the time they did come out with a modern DA lockwork, they had neither the money nor the interest in improving and promoting it. It was simply easier to throw in the DA towel than to try and work out the bugs in the new guns.
Jim K gives an excellent summary.
Colt was for many years was and still is a poorly managed company. It’s civilian product line is small, lacks innovation in a saturated competitive market.
1911’s – it’s easier to name companies that don’t make them now and the buyer has a large choice of guns in every price range.
AR’s – S&W cornered the low end entry market with the Sport. Like the 1911 the field of manufacturers making AR’s is wide open.
Single Action Army – highly overrated piece of junk. I brought a new one around 1996 for $1,100, The quality control was so poor first all the nickel peeled off. The chamber throats were so large even Bob Munden couldn’t get it shoot well. The throats measureg .456 – 457”. I sent the gun in and Colt returned it untouched with a note saying it was within specs.
I don't have a dog in this fight but the bottom line is Colt abandoned the civilian gun market. They have made feeble attempted to reenter the market. Colt had a couple of duds with the All American 2000 and the Cowboy. I did get to handle a Cowboy and thought it was a well made gun for the growing CAS market. For some reason they never brought it to market.
Then they, along with S&W, further alienated gun owners by jumping on board with Clinton’s smart gun technology program. S&W learned from the anger of gun owners and changed their position.
No company can grow when they ignore R&D and market trends. The concealed carry market has totally passed them by save the Mustang .380. Other than Government contracts Colt is surviving by living off it’s name.
Just for the record I have purchased several Colt handguns over the years in addition to the SAA. I like their revolvers and am always on the lookout for nice used ones.