Hindsight has a way of embarrassing analysts. Take Doug Anmuth (Barclay Capital) who predicted that Google would “move 5 to 6 MILLION Nexus One Handsets in 2010.” Despite the Nexus One’s inability to capture the consumers’ hearts, Google’s first smartphone is still one of the most important in Android history even though it is not an “iPhone killer.”

America’s first Android smartphone, the T-Mobile G1, sold 1 million copies in its initial 12-months, so was it too bold a suggestion that the Nexus One would ship six times as many, since the latter is a substantially better unit?

As Android progresses towards 3.0, many early adopters of Sprint, T-Mobile, Rogers, etc. versions are feeling the effects of being left behind. What the Nexus One does is raise public awareness of Android’s possibilities both in terms of technology and software. Yes, Google has opened up the additional problems of phone support (the lack of it) for its product, but it has also demonstrated that software when integrated properly with good hardware can rival - and in some ways trump - the iPhone for usability and design. From now on, buyers are measuring all new smartphones against the Nexus One’s software and specs. No longer will people tolerate $500+ devices that have HVGA screens, slow processors, and most significantly, older iterations of Android, which carriers/manufacturers may or may not upgrade in a timely manner.

The Nexus One has also demonstrated the need for dedicated phone support currently provided by carriers. Moreover, the idea that marketing sells could not be truer than in the Nexus One’s case. Technically, aside from missing multi-touch, there is almost nothing not to love about the phone. $530 is not cheap, but there are lots of worse products asking for much more, and Google can offer it for that amount only because it has spent little on advertising.

Forget about the sales numbers. I question whether or not Google ever intended its phone to be a big seller. After all, the Nexus One is being listed at about cost. The product’s significance is that it is a benchmark for carriers and manufacturers to live up to. Google has implicitly made the declaration that the current Android market needs to get its act together and move like a well oiled machine. In Canada, Apple is responsible for pretty much everything to do with the iPhone. All major carriers sell it. Apple programs the software, does much of the advertising, and designs the hardware. Android products do not have this same sort of controlled process since support and coverage, manufacturing, and software are all handled by different mega-corporations.

I liken the Nexus One to something like a supercar. The new Lexus LFA retails for approximately $375,000 USD, yet the carmaker is losing money with each of the 500 models sold. Toyota, with its knowledge and vast resources, is releasing the LFA because it is a statement of what the company is capable of. The Nexus One accomplishes the same thing for Google. People may not be buying it, but everyone is talking and writing about it and Android. There is no such thing as too much press, unless you are a young, overexposed actress.