I think the problem with the smartphones that google launched was its price point. They are competing with Apple products with the price range that they are targeting. Plus, the fact that the android market is heavily saturated with different products from various companies.
Apple has the advantage of having their software exclusive to only their products.
When you have different companies using Android in phones that are aggressively priced depending on the market they release it to, it is really hard to capture a big share of the market by launching a premium phone that has the same feel (software-wise) to it as the lower priced ones.