You can invent reasons like "lack of innovation" but it's not why it has failed.
A couple of weeks ago I didn't even check what it does, before ruling it out, when considering what tablet to buy. Yet another web platform, pushed by a single manufacturer who's just trying to gain market share, didn't sound promising at all, I saw this obvious end coming, albeit not so soon.
And all the blabla about cool platforms, dual/quad core CPUs, gigapuxel cameras with 2mm lens, wake up people. It's all crap. Screen quality, smooth UI (and no, you don't need dual/quadcore for it, just optimized code, not bloated bytecode running in a JVM with no JIT) and battery life is all that one has to care about about these gadgets. Oh, and the fact that you can install applications on it, without needing some greedy bastard's approval.
And one more thing, pardon if it hurts your feelings, but mobile OS functionality at the moment is VERY VERY VERY BASIC. Even this basic thing is hard for google to keep it up, but only because there are gazillion of hardware configurations to support. There is NOT A SINGLE mobile OS out in the wilds, having more functions than what a group of dozen developers could achieve within 12 month using Linux as a base (for a particular gadget).