why would any company want a market that small?
Google's MO usually doesn't include selling a gadget to a customer in exchange for some money; there's too much labor per-piece, handling of physical objects and dealing with lots of small customers involved.
What they're trying to do, is push the Android platform. Every now and then, they'll throw out a very shiny and rather expensive toy to enthusiasts, developers and the like; to set a bit of a bar and demonstrate their vision of where other manufacturers are to go. A couple of thousand units are sold, HTC quickly whips up their version (with Sense, sans some Google exclusivity) and sells many more at a more attractive price, with more marketing and actually aimed at the general public.
The G1 and N1 owners push sales of the Heroes, Desires (high-end and) and Legends (lower-end N1 alternatives) just by having a shiny exclusive toy. Thanks to a geek-friendly buying process and very limited support, Google doesn't have to deal with Joe Sixpack's questions to tech support, grabs a couple of megabucks towards development of the next model and, most importantly, pushes android. Us geeks get to play with a shiny gadget without the uncoolness of everybody's grandma and their dog getting one (iP*). HTC and relatives sell the bulk of the devices and, having some experiences with Joe & co, can deal with their customers' problems. Everybody wins.