It was a transitional rifle, wedged between two lines of military thinking.
By the end of WWII, everyone saw the need to go to semi-auto, after the success of the Garand and STG-44 became apparent.
The Soviets encountered far more of the STG-44 than the Western allies did, and saw the benefits of an intermediate calibre rifle - smaller cartridges effective to realistic ranges (200, maybe 300 yards), easier to train (full powered rifles take a fair bit more practice to get used to), etc. etc.
But they were still, mentally, locked into an internal magazine with limited ammo mindset. Give Peasant Ivan 30 round magazines and a giggle switch? He'll just waste precious resources of the Motherland! It's not that different from when armies moved from single shot bolt actions to internal magazine bolt actions - almost all of the first generation internal magazine bolt action rifles had magazine cutoffs. The soldiers were under strictly enforced orders to single feed their rifles until it really hit the fan.
Because the American and western allies didn't encounter the STG-44 in any great numbers, they didn't get to understand the effectiveness of intermediate cartridges at the same time. So they stuck with full powered rifles, upgrade them to semi-auto magazine fed, and figured they were good to go. That's where the M-14, FAL, and rifles of that ilk came from.
It wasn't until Vietnam that they really started to see the value of an easily controlled, lighter, intermediate calibre carbine. Guess what the NVA and Viet Cong irregulars were most likely to be using? If you said "AK" you'd be wrong. The bulk of them were equipped with SKS's. And they were effective with them too - especially given how little training they received, and how much the North's command was willing to win by just throwing massive waves of meat at the problem.
The debate about whether switching from the M-14 to M-16 mid conflict is one that will rage forever, but it was probably the right decision. The M-16 was lighter, you could carry more ammo, and it was accurate and deadly enough for any reasonable distance of engagement the troops were like to encounter in the hills and jungle of the region.
The Chinese hung onto the SKS as a primary arm, and kept producing them, until the early 80's, IIRC.
And it's still being used in conflicts around the world. And used effectively.
So failure? No. It was probably the most successful of the post-WWII transitional arms. But it was still a transitional rifle. It was doomed from the start to be replaced by the Assault Rifle template that the Germans created in the middle of the war. It just took different countries, different amounts of time to get all the way from the old school bolt to the New Kid On The Block assault rife.
