Google is not competing with Apple on devices. Google is more interested in an ecosystem where they won't be at the mercy of other companies. Imagine a vibrant, rapidly expanding mobile internet devices and google doesn't have any footprint on it. They would have to rely on Apple and other smart phone manufacturer not screwing with them, literally being at their mercy.

With Android, this is not the case anymore. Even if Apple decides to screw with Google and provides Bing as default choice for all their products across the board, they have other options.