They shouldn't be trying to make a dent in the hardware space. They should be trying to showcase Android and creating a direction for the Android O.E.M.'s to follow.
That approach has lost buy-in from the more independent brands. The brands—notably foreign—have their own visions for the OS and its UI. I'll be glad if Google abandons Android in favor of its own OS.
Pundits told Apple to quit its measly hardware efforts and license the OS instead. Aren't you glad time proved them wrong?