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."
2005: Android is a "mobile software company"
2007: Android prototypes look like blackberrys
2008: G1 launches as a iphone knock off with noticeable differentiation (horiz slider).
2009: Droid first high end Android smartphone, another horizontal slider
Jan 2010: Google releases a Google branded straight up iphone clone, Jobs flips out.