No, that didn't blow up in Apple's face at all. In fact, I would say it blew up in the FBI's face. They wanted an easy case to make a court undermine Apple's efforts to strengthen encryption and, ultimately, force backdoors into the software - and though "But ISIS" would be the argument that made people accept it. Instead, they received nearly unprecedented opposition and finally backed away somewhat from using the courts to undermine everyone's security and privacy.
Also, you clearly didn't read the entire article, IHH, because they have said they are only testing their alternate method, and if it proves unsuccessful, they intend to return to court and resume trying to bully Apple into capitulation.
But even if they are successful, the end result is that while the FBI would still get into this phone on its own, Apple, Google, Microsoft and the others would still be able to work on continually improving encryption, privacy and security.
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