I think the OP is making a good point but direct profits or revenues wasn't the lead motivation for Google to go full throttle with Android and then the $12.5B MMI deal... it was that this way:

With Android, Google accelerated/is accelerating the pace of smartphone adoption (more smartphone = more internets = more Google = more Ads) and at the same time putting their services in front of the smartphone vendors for a undisclosed, but possibly tiny, fee per device. Enabling Google Search as default but not requiring it (as it's been the case of many Android smartphones with Bing by default in the US).

Note1: Android is free. Google Core-Android-Apps are not: Gmail, Market, and so on

Note2: Maybe even the fee is not a monetary one. It could be the option of selling the smartphone as a 'Android' phone (with is trademarked), using the Android logo, etc.