The two-wheelers really needed paved or at least smooth surfaces, of which there weren't many. It was also way too easy to fall off the contraption, and people's leather shoes were nowhere near as durable as a horse's iron shoes. What's more, the Laufmaschine also faced competition from another new invention: the railroads.
So, the utilitarian-inspired mechanical horse instead became a fancy toy for aristocrats and the rising bourgeoisie. The French called it a draisine, the English a hobby horse. The devices were often graced with equine figureheads, or even carved dragons and elephants.
Later innovators built on Von Drais' "running machine" over time to make the bicycle what it is today. Read the whole story at Wired. Link
(image credit: Flickr user Mark Stosberg)