We see Google regularly discussing how many Android activations they are getting every day, and see reports of Android market share being extremely high, but that's definitely not a realistic picture of what's going on.

When you look behind the subterfuge it's clear that Android has cost them in excess of about $20 billion (taking into account the Motorola purchase) and is not making them money the way they obviously hoped. Motorola is making a loss each quarter and today it was made clear they were going to struggle to get any injunctions using the Motorola patent portfolio.

How long can they keep pumping money into a platform that isn't, and probably never will be, profitable (at least not to Google)?

Probably as long as Adwords keep providing them enough cash. Motorola should not be considered as part of Android investment: it was mainly dedicated to patent acquisition that could have a much broader use, especially for the nexus brand. Google is slowly entering the mobile market on its own, which is a very hard thing to do since the iPhone has launched, and the competition catched up. I think it's a pretty smart move to keep the advantage of an entire ecosystem; Google always did this, buy expensive service and eventually turn them into profitable businesses. From a pure market share point of view, it's a gain: their search engine is everywhere, and that's what counts most.

It seems counter productive though when it's now pushing them to lose their formerly very strong iOS foothold, which required very little work on their part but was actually far more profitable. I can't help thinking that developing Android has shot themselves in the foot.

I know it's easy to see in retrospect but would they not have been much better focussing on strengthening their role within iOS rather than trying to compete with it. They'd probably have been working a lot closer with Apple at this point which is where a lot of their mobile profits are coming from.