So what you're saying is that username/password is still the only choice for privacy minded people.
If they had not followed this strategy they would be killing in this market, even whilst supporting XMPP Federation. But they have chosen to release multiple proprietary products, so they aren't the lead in the market. Silly of them really, and it just shows you they aren't really the nimble company they once were.
Did any Google engineers ever reveal Google's true intentions for shutting down their XMPP offerings?
It is definitely not a high quality XMPP experience. If you want to use XMPP, you should probably be using duckduckgo's XMPP offering.