Originally Posted by PatNY
It seems they forgo considerable potential profit by distributing their android OS without charge and many of their apps as well. Frankly, I've never understood why they do this.
They needed to create a viable alternative to iOS for mobile devices, or they risked being squeezed out of the mobile advertising market. It is all about the advertising, the other services just feed into that.
Also, they do make money from distributing the non-free portions of Android to smartphone manufactures.