It turns out its easier to "sell" lots of copies of something for free. Microsoft actually sold those > 1 billion copies of windows. Google still makes almost nothing on android. This article was absurdly over the top IMO.
http://www.asymco.com/2012/05/14/the-android-income-statemen...
Also note that the more recent the version of Android, the higher they monetize:
http://www.insidemobileapps.com/2012/10/24/androids-jelly-be...
Note that Apple's ARPU number includes COGS for the hardware which Google doesn't incur (Samsung et al do).
Is there any argument to be made that Google can somehow go from making $1.63 to $300? Not to mention that Apple and Microsoft are also making that tiny ~$1 per user from their stores and search as well.
All of this also doesn't count the fact that running the store isn't free. That revenue isn't 100% profit. My argument is that while they can grow this ARPU, I don't see any possible way that it becomes a big enough number to matter compared to their search profits. What is that path? That is the interesting question. (Note this could partly be answered by the fact that they bought Motorola and do now in fact sell some phones themselves.)
Apple is grabbing a large chunk of profit once from the most profitable consumers. Google is grabbing smaller amounts of profit but from a far larger number of regular users on a monthly basis.
At some point the larger Android installed base will mean some number of users will match the profitability of an Apple user's biannual purchase. There is no requirement for a one to one match.
If Google had not done Android then Apple/Microsoft/RIM would have been able to exclude them from the mobile market, which is on its way to becoming the relevant market.
As for Motorola, I don't know. Google can't treat them specially otherwise they will alienate existing Android partners. There is already the Nexus program for providing the unadulterated Android experience, which presumably keeps prices low due to volume.
Other than patents, Motorola would only provide leverage if existing Android partners did not want to play ball on something but there hasn't been any evidence of that happening either.
No, it didn't. A very large portion of those 1 billion copies were pirated.
MS itself says here (from 2010) that about 1/3rd of all installs are pirated.