Does it mean Google recognizes the need to monetize Android development. And they do not see search/mobile advertising to be enough. Selling their own device is the only way they can justify their Android endeavor.<p>It would also mean chrome tablet is not far behind. There are rumors already: http://www.huffingtonpost.com/shelly-palmer/google-preparing-a-tablet_b_410287.html
No, it means that if you give people items instead of a service that you will have to charge them for those items.<p>Free physical goods does not scale because you can't guarantee that a freely given physical good will not be put to uses that you did not envision.<p>The people that can do that are the mobile carriers which is why they will be able to offer you a 'subsidized' phone, they'll take it back over the time that you have the phone in your possession. It's the whole reason for all that sim-locking and jail-breaking that people do.<p>Offering a service and selling a piece of hardware are two fundamentally different things and have nothing to do with recouping development costs, it's just another way to make a profit and to ensure that it scales.<p>Have a look at the cuecat <a href="http://en.wikipedia.org/wiki/CueCat" rel="nofollow">http://en.wikipedia.org/wiki/CueCat</a> fiasco to see what could happen otherwise.