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High quality Scandinavian-style plywood probably would have lasted decades.
Nice materials + pretty design does not necessarily result in a good product.
But they didn’t think very hard — see my other comment. I don’t think a single solid piece of hardwood would have performed a whole lot better. Either metal reinforcement or plywood or much more carefully considered joinery was needed.
The problem with knots is that they resist drilling and screwing. The problem with new growth is that the pith is the weakest part of the wood, and new growth has the most pith.
Still, it's not a weak and terrible pos wood-like material like 1990's MDF, it will probably be ok for most uses as long as the grain direction is respected in regards to shear direction (typically you want the grain direction to run perpendicular to the shear forces) and everything is properly braced.
So the grain needed to run horizontally in the horizontal part to support the bending load. It was probably best for the grain to be vertical in the vertical part, although that was maybe less critical: that section was mostly in compression. It probably also looked better that way.
In any case, the actual construction put a finger joint in the horizontal section just past the turn, so a tiny bit of vertical grain wood extended horizontally over the turn. And several of the legs cracked just along the side of the finger joint, and one failed completely after about a month of gentle use.
The design plausibly could have worked if the joint went diagonally through the turn or was below it. But plywood is strong along both in-plane axes, and the legs could likely have been cut in single pieces from sheets of plywood with strength to spare.
Attractive plywood, even from hardwood species, is readily available. The plies are visible along the cut edge, but this is actually a style people like, especially in Scandinavian furniture. Even IKEA sells some nice chairs with plywood elements, at entirely reasonably price points.
Teak especially is so good at dealing with water that it was harvested to near extinction in the 19th century just to build ship's decks and cabins out of it.
Having done a bit of woodworking as a hobby, I would say that hardwood could be inappropriate if it is used for an element that is purely structural, internal (and thus will be hidden by external features) and there are cheaper alternatives that are just as good, or stronger materials available and we are talking about a critical structural element.
That's a pretty abstract answer but it's always going to depend on the specific project. Sometimes a piece of furniture has no hidden internal structure, or the appeal of the furniture is that it is all bare wood and you want it made entirely out of a beautiful "furniture grade" hardwood. For certain upholstered furniture, such as many sofas, using expensive materials for inner framing could not only be superfluous and add unnecessary cost to the piece, but in certain circumstances there may be better materials available even if you could make a perfectly adequate structural support that will last a lifetime using expensive hardwood and the right joinery for critical stress points.
I read amulto's point as being "expensive material and fancy joinery doesn't matter if you have a weak design."
Especially when thin, wood is surprisingly easy to break, and it doesn't handle being pulled on very well at all.