Google has squandered an opportunity. An opportunity to squash the iPhone squarely. Android is a better OS, hands down. It's SDK is open, it's community is open, the design decisions that have been made for it's UI are fairly consistent across the device (and the software that is released for it!), and it's got way more extensibility than the iPhone does. Not to mention, it's usable on any phone. Not only do they want you to replace certain pieces of the phones functionality, they encourage it. Nowhere will you find anything like that in the cellphone industry today. Even the beloved iPhone.
So, if I say the OS is so great, why do I think the iPhone has beaten Android instead?
Simple. The hardware for the G1 and every other Android device, well, sucks. I don't believe there isn't the right hardware out there, or that it was any one persons fault, but it simply has really shoddy hardware. This completely degrades the user experience of the device, even if the OS is just that much better from a technical standpoint. The iPhone delivers a truly full "experience," from end to end. There's no denying it. While you're sitting there waiting for your messaging system to come up, the iPhone is happily whirring away on its message already.
So even if the Android OS truly is the better choice, there still aren't any viable choices for using it. It's like having a five ton gorilla locked in a box. Waiting even a single second for the device to "unlock itself" so that you can use it is unacceptable. Waiting for the phone to catch up with itself to answer a call? Unforgivable. It's a phone. That's its purpose. There are still thousands of people voting with their money on this, and all that's happening is that it's being ingrained in people that Android provides a poor user experience.
Don't get me wrong, I certainly will never switch to AT&T to get the iPhone. In truth, I wouldn't want one. I'm stuck with Android because I love all of the integrated Google services. I am simply disappointed. Google (and HTC, and T-Mobile) really botched their charge in to the superphone market. It could have been great if they had insured that the proper hardware was implemented. Now, it's most likely to be religated to tech geeks and people that want features over finish.
Let's hope I'm wrong!