Upload & Sell: Off
Maybe. I imagine that the only way they could have made a profit with FF cameras would have been to make them very expensive and targeted for studio and some other fine art work (landscapes), à la Canon 1Ds with ~$6500 price tag or something like that. Maybe they were afraid of being beaten by the giant(s) Canon (and Nikon) with their much bigger R&D budgets and production capacity?
Well, for the record, Kyocera is about 50% bigger overall than Nikon, and a little less than half the size of Canon. If Kyocera wanted to invest in digital imaging R&D they could have put competitive amount into research, and without a doubt they had the technological and research capacity to make a very good run of it. The ability of Kyocera to invest in the digital market was not the issue.
Rather than fear of competition, the nature of the partnership with Zeiss was probably the drving issue. First, Kyocera was not happy with the relationship and not happy having to meet Zeiss very restrictive standards and requirements. Second, the way the realized benefits of their R&D would potentially disproportionately benefit Zeiss (speculation, based on possible contractual terms), they could have determined that it did not make sense for them to move forward.