Google makes $5-$10 per Android phone, maybe 10% of what it's partners make. That's about the same amount as Microsoft makes off each Android phone and is perhaps 1/50th of what Apple makes off each iphone.
Even worse it turns out that the half empty gold mine is on public land and any crazy old coot can waltz in and start mining themselves:
Android won their "empire" by being the only credible licensed iphone clone in 2009. The real question is whether this empire is going to be of the Han/Roman/Windows variety as so many commentators assume or will it be a short lived dynasty like the Qin/Napoleonic/Netscape variety.
I'll put my money on a Three Kingdoms scenario playing out. Why do I think WP 7 has a ghost of a chance when everyone's done nothing but dismiss them? Let's review:
Android phones started shipping in Fall 08. However they really didn't have any traction until Fall 09 when Verizon started pushing the Droid. And it wasn't until Froyo phones shipped en masse in Summer 2010 where Android started to dominate carrier shops.
In the same way WP7 launched buggy, incomplete and lackluster in late 2010. It had no traction for it's first 3 quarters. Lately though we've seen a mature OS update released on a 2nd generation of phones that were designed for it.
More importantly Microsoft has made no secret of it's desire to buy market share with retail subsidies. And it will certainly be buying this market share at Android's expense. How much they're willing to lose buying this market share isn't clear but if it's anything like the money they've plowed into Bing that's a lot.