Thats the question CBSNews tried to answer, and I think they hit it right on the nail. This all starts out with At&t getting the iPhone and allegedly Verizon denying it (thank god right?). This meant everyone else had to find something to keep their smart phone line relevant, and that was where Android flew in to save the day.
The OS was awesome, fast, free and available to any company who was up for the challenge. Google's involvement made it better because as we all know... Most of what they do, turn to gold.
Carriers get excited about Android, too. For two reasons. First, Android (and the very good bundled Google apps) allows handset makers to make inexpensive devices. Carriers and Google both encourage a race to the bottom where handsets are commoditized, but smart.com
Second, because Android is an Open Source platform, carriers can work with handset makers, they can dictate the feature set and, as a result, revitalize the revenue stream. They can promote their favorite apps, content, and services sales that have been choked by disintermediation.
But it’s not a straight shot. Android lays out the playing field for a contest between Google and carriers.
Google’s intent is clear: They want carriers out of the way. In their Mountain View Hypergalactic HQ, Schmidt, Brin, Page, and Rubin all think carriers are greedy bumblers, short-term thinkers, technically and culturally incompetent in matters of smartphone OS and applications. The Google brilliants don’t want to return to the days of crapware, the applications PC and laptop makers forced upon us in order to generate kickbacks from publishers. (The PC being a lively ecosystem, crapware removal products such as the PC Decrapifier came to the rescue. At one time, Sony obligingly offered a decrapified Vaio for an extra $50.
Now aren't we glad Verizon did not want the iPhone?