I don't think Epic dropped the ball here. It wasn't marketed like a mainline title and wasn't supposed to be treated like one. Though 1 million is substantially lower than the 2-2.5mill I once thought it would achieve, I think it's naive for anyone to have expected Gears 1-3 style figures.
Come Gears 4, the sales of this game will matter very little.
MS seems to think differently
With little marketing and it being a prequel, not sure why they would have expected it to perform like any other Gears.
"Gears Of War: Judgment sold more on one platform than Bulletstorm had on three, but with just over one million copies sold it still underperformed for Microsoft."
They clearly were expecting more, now SHOULD they have expected and WHY were they expecting more? those are questions that are up for debate but the only thing i can think of is they think the fanbase will just gobble up anything.