Microsoft can’t afford for its mobile platform to account for just a sliver of the industry’s unit sales. Their licensing model is all about volume — low per-unit profits multiplied by an enormous number of units. They’re not selling $400-600 phones, they’re selling $8-15 licenses for an OS. But Google lets carriers and handset makers license Android for free. And not only has Google cut the bottom out of the market price-wise, by the time Windows Phone 7 phones actually come to market, Android will have two complete years of momentum and market share behind it.
The great @gruber shares his Post-I/O Thoughts.

Source: daringfireball.net