Not only is Android profitable, but dominance and prominence on a consumer device makes it that much easier for Google to push its other products.
Think about Maps on Android vs. iPhone - one is a lot more full featured and up to date with Google's tech than the other. Android being the de facto standard smartphone platform would be immensely useful to Google's other products.
e.g. Google Voice simply does not integrate well into the Apple user experience, but does so flawlessly on Android.
Google is vertically integrating the entire stack between them and the user - this is a great thing for Google, and not every link in the chain needs to make money doing it.
Think about Maps on Android vs. iPhone - one is a lot more full featured and up to date with Google's tech than the other. Android being the de facto standard smartphone platform would be immensely useful to Google's other products.
e.g. Google Voice simply does not integrate well into the Apple user experience, but does so flawlessly on Android.
Google is vertically integrating the entire stack between them and the user - this is a great thing for Google, and not every link in the chain needs to make money doing it.