I don't think that's the whole story. This could also be a PR spin. Google said later very often they feared an Apple monopoly on the smartphone market and Android is there to prevent it. Also Schmidt hates Microsoft to the bone and is happy about everything that hurts them.

What makes Google appear unfocused is their long time thinking, they don't care if something integrates in another product only 5 years later. I bet the Google Car and Google Maps integration will be perfect and they also create 3D models of their environment what fits in Google Earth.

Coincidence? I don't think so, these 3 incredible smart guys have all day to think about that.