The business model is a failure but I think they got the results they wanted from the N1 experiment. It's like when a car company makes some concept that gets 300 mpg, you wonder "why the hell can't I buy one?!" Well it costs millions of dollars to build, that's why. But they start to incorporate parts of it into their designs.
Similarly, the N1 launched as the best smartphone on the market, even with its faults. And now the Desire and Incredible are available on both sides of the Atlantic, and they're both generally described as more polished versions of the N1. Whenever they release the N2, it will set a new standard, whether or not you can actually buy it.
Ok, so the one big gaping hole here is that Google spent a lot of money to develop and build the N1, and now that its moment (unheralded by the non-hardcore public, since they didn't really advertise it) has passed they just kinda... shrug, tell people to buy the Incredible, and let us know that the N2 is in the works. I guess they have money to spare.
Actually, given that HTC is the target of the famous anti-Android proxy lawsuit by Apple (with Microsoft joining the fray) maybe the N1 is really a cleverly disguised legal defense fund...
