Never had much business savvy, but also never understood how you ran a business at a loss. Google isn't charging for Android. To me that is operating at a loss, since they must be investing money in its development. MS did that for many years with Windows Mobile (or PocketPC), until they finally started getting a return for their investment. Granted both companies have the wherewithall to operate a section at a loss for a period of time, but neither can do that indefinately. The difference appears to me that MS intended to make the division profitable and continually worked to make that happen. If Google continues to operate on a zero income model, it seems that this is a hobby for them, or they intend to throw this into the 'public' domain and let it self sustain itself like Linux. That is working real well.
Sure there are great builds out there, but there are also marginal ones and scads of them. Overall, it is a niche OS. I can see Android ending up that way as well, with Google eventually tiring of it and OEMs maintaining independent 'proprietary' flavors. Or maybe they will start licensing newer releases. Yea verily, MS needs to get off its duff and do something compelling with WinMo, but Android isn't going to kill it, any more than Linux is killing Windows or OSX.