Yes, it was a disappointment. It lacked color (something the Apple II already had), had buggy software, and all at a price that rivaled the Apple II.

$1,298 for the Apple II $2,495 for the Macintosh

It completely destroyed the progress they'd made. Jobs took this project opportunistically at a time when Steve Wozniak was recovering from a plane crash. If he'd approached the project more strategically, it could have positioned Apple to take a place in the market share of cheaper PC's of the time.