I also wonder how long Google's shareholders will allow them to commit the kind of resources it must take to support a project like Android, given that it generates little to no revenue for the company.
Google's shareholders will continue to support anything that Google wants to do, as long as Google keeps on making money hand over fist. Most folks don't understand Google's business model. I can assure you that Google's "free" software generates huge amounts of revenue for Google.
Google is very much unlike other companies that you might compare it to; competitors such as Microsoft, Apple, Nokia, Amazon, etc.
Microsoft makes most of their money selling software. (XBox is a notable exception.). Apple makes most of their money selling hardware. Apple writes a lot of software, and does make money from it, but that software generally only exists to sell Apple hardware. (Which is why you see so few of Apple's applications ported to run on Windows PC's, even though that seems to be another logical source of revenue.) Nokia makes their money selling their cell phones. They purchase their smart-phone's OS. (Or they purchase a company that makes smart-phone OS's.) Amazon makes their money reselling other companies' goods. Even their Kindle is more or less a loss-leader to help them sell books.
Google doesn't make their money the same way as any of the above companies. Google makes their money selling advertisements. Google writes a lot of software and offers lots of services, such as their search engine, Android, Chrome, Maps, YouTube, Gmail, etc., but the vast majority of the software and services that Google offers is free. They are free because they are just vehicles for Google to present advertising. (They are also free because that makes them irresistible.) The sale of that advertising is how Google makes a ton of money. It is an unusual and very successful business model; similar to how television and radio (at least prior to the advent of cable and satellite radio) work.
The more that Google's advertising vehicles are before the public, the more advertising Google sells. Google's smart phone and slate operating systems have been wildly popular with smart phone and slate developers. (As you might expect. Android is reasonably good, it is regularly updated, and it is free.) That has made Google's advertising very prevalent on mobile devices. That has made Google, and will continue to make Google, a fortune. Google practically owns online advertising.
If Google hadn't offered free OS's for smart phones and slate devices, Google's presence on these devices could easily have been marginalized at any time. There are plenty of alternatives to just about all of Google's software and services offerings. At any point the device makers could have put the squeeze on Google by extorting money from Google to continue to use Google's software and keep Google's ads in front of the public.
Instead, thanks to Google's free OS's, Google now has the mobile device makers where they want them. There are very strict rules associated with device makers using Google's OS's. Those rules require that all of Google's advertisement vehicles stay in place exactly as Google dictates. See:
Is Android Evil? | VisionMobile :: blog
In fact, this bring up another interesting point. It's kind of ironic that many users see Android vs. iOS as a debate between open versus closed. Google controls with an iron fist the exact software and hardware make-up on every mobile device sold using their OS. It's just that they don't care about things that aren't directly related to their bread and butter: advertising. I guaranty you that if you came up with an application that interfered or competed with Google's advertising on an Android device, it would never see the light of day.
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Randy B. Singer
Co-author of The Macintosh Bible (4th, 5th, and 6th editions)
Macintosh OS X Routine Maintenance
OS X Maintenance And Troubleshooting
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