3.5 inch already peaked in 1985, thats when NEC first shipped 1.44MB inside PC-8801 mkII MR. IBM followed two years later switching PS/2 to HD floppies, Apple in 1988. 80 tracks ~50KB/s speed. In 1990 IBM bumped PS/2 to 2.88 ED. Different magnetic material, double the bitrate, ~100KB/s.

... But NEC beat IBM by already doing 'five blades' in 1988 selling PC-88 VA3 with 'Triple' or '2TD' format 3.5" floppy sporting 13MB unformatted 9MB formatted capacity. Same perpendicular head as ED, same magnetic medium, same bitrate, 3 times more tracks (240) while still using cheap stepper motor unlike ZIP head actuators, compatible with same standard ED floppy controller chips. Sadly no one in the west adopted it :(((

There was one more avenue for bumping capacity never really explored on PC - zone bit recording invented by Chuck Peddle in 1961 and supported by Floppy controllers in Macintoshes, Commodore (Chuck Peddle designed drives) and Victor 9000 (Chuck Peddle designed whole computer). Free 50% capacity bump. Victor 9000 pulled 1.2MB capacity out of Double Density 80 track 5 1/4 drive.

Combine 2TD wiht ZBR and we could have had cheap 13.5MB formatted capacity floppies since 1988.

That's kind of the point of my comment - software developers couldn't release on NEC without excluding IBM customers etc etc. They were stuck with 1.44MB because that was the only thing guaranteed to work. There was a human management problem around agreeing on a specification; drive manufacturers and software companies simply had conflicting incentives, so the market was a mess.

In retrospect I think the only reason Zip was able to become the undisputed market leader in high-capacity disks is that CD-ROM fully took over commercial software distribution.