Yeah, but there is a difference between potential competitor and an actual competitor (and especially a competitor that makes more mobiles than any other company), and Google aren't really in the business of making phones. Well, at least they weren't, I see Google has just announced a new phone, I don't know how this will change the way phone manufacturers see Google, but Google have established the Android brand now, and it will be hard for phone manufacturers not to carry on selling Android phones.
It is not user friendly, and doesn't have much apps backing it up.