Jimmy Page? "Stairway to Heaven"? That sounds to me like it did "catch on", to some extent. Maybe more so in Giannini's home country of Brazil? The company web site still lists several variants.
It looks unsuited for classical playing position, though. I think it sounds like a wonderful guitar in the Noguiera recording above, and nothing like a harpsichord. One could argue that Jimmy Page's 12-string version evoked that instrument, but to my ear no more so than standard 12-string guitars.
Aside from the body shape, the materials and dimensions seem to be strictly traditional, including rosewood. I assume the Brazilian RW ban affected the Craviola (and any Brazilian-made guitar), and in combination with its odd shape (limited appeal), the ban may have made the economics of export (e.g. having it made elsewhere) simply unworkable. (I'm curious now how Brazilian guitar-makers in general adapted to the convention.)
Some publicity from various retail sites:
A uniquely shaped Brazilian folk stringed instrument with the modern touch of Fishman electronics...
Designed in 1969 by Paulinho Nogueria, a famous Brazilian guitarist, this patented shape instrument took the world by storm with such as artists Jimmy Page, Jose Feliciano, 4 Non Blondes, Bill Withers, Jeff Linksy and many others playing this unique instrument live or in the studio. Its contoured shape fits perfectly when being played in a seated position, nestling comfortably on one's leg. A must-have instrument for everyone who wants to differentiate themselves from the pack.
... sounded a little like the Harpsichord (Cravo in Brazilian Portuguese) and a little like the 10-string Brazilian Viola; thus the Craviola name was born (Cravo + Viola = Craviola). Numerous musicians fell in love with the Craviola and helped to create its fame and identity across various musical styles. Among the most famous is Jimmy Page, guitarist and composer of the legendary classic rock group Led Zeppelin, who got to know the Craviola in the early 70's and recorded several hits with his 12-string model. The most widely known is the iconic "Stairway to Heaven", beloved by fans for its unique timbre that's often compared to instruments from Asia and the Middle East. Jimmy Page recorded other successes and made several live appearances at Led Zeppelin shows, further strengthening the Craviola's fame as "the instrument with in the shape of a drop". Other famous musicians known for playing the Craviola include Puerto Rican guitarist Jose Feliciano, as well as Luis Bonfa one of the fathers of the Bossa Nova.