I see it as Google discovering what Microsoft did with the Surface (once it found out where the Surface line's true audience was): that, left to its own, an OS ecosystem will devolve. You get the race to the bottom in quality and price as well as high-end vendors who are more interested in "differentiation" (read: difference purely for its own sake) than making the best possible product. You don't need to go full-on Apple and refuse to license your OS, but it helps to make your own hardware as a sort of guiding light for everyone else.
And frankly, the Android market is kind of a shambles. Samsung just took a big hit (even beyond the Note 7 fiasco), Chinese OEMs are successful but mostly in their home country, and companies like HTC, LG and Sony are left fighting for table scraps. HTC may revel in being the hidden brand behind the Pixel simply because it wasn't going to sell many phones otherwise.