There are several issues in your code.
1. The first call to axis returns error since there is no 3D plot at that time.
2. hold does not work on 3D plot.
3. plot3 can not accept 'color' attribute.
The following updated code works on LabVIEW 8.6.
n=500;
x=[20,4,6];
y=[10,8,90];
z=[16,2,50];
color=rand(n,3);
plot3(x, y, z, '*')
axis([min(x) max(x) min(y) max(y) min(z) max(z)])
xlabel('X');
ylabel('Y');
zlabel('Z');
view(36,18)
grid on