Here's the thing: If it was such a big problem, why was Schmidt allowed to join Apple's board in the first place?
Schmidt was elected to Apple's board in August 2006, a year after Google bought Android (and over a year after Apple started work on the iPhone). Unlike Apple, Google's smartphone ambitions weren't secret. Could they seriously expect Schmidt to file everything he learned about Apple's smartphone plans in an unmarked section of his brain that he didn't use when he was at his day job?
Considering both the iPhone and Android were still in development at the time, the statement holds true. If potential products stopped CEOs from joining other companies' boards, then no one outside the company could ever join a board.
Android was more than a "mobile software company".
They were known at the time to be a re-assembly of parts of the Danger team working on a smartphone OS. To me, that's enough to know where Google's ambitions were pointing. The huge volume of "Google phone" rumors that started long before Android was unveiled says to me that plenty of other people saw that too.
I just don't see how, too anyone paying attention, "Google is working on a Danger-inspired smartphone OS" doesn't automatically imply "Google is working on something that could easily crash right into the iPhone."
Schmidt was elected to Apple's board in August 2006, a year after Google bought Android (and over a year after Apple started work on the iPhone). Unlike Apple, Google's smartphone ambitions weren't secret. Could they seriously expect Schmidt to file everything he learned about Apple's smartphone plans in an unmarked section of his brain that he didn't use when he was at his day job?