nit: Android was purchased long before Apple entered the market. Doesn't change your argument, no one was expecting vendors to rush to a new OS because of the iPhone revolution.
As others have pointed out, Google bought Android long before Apple released the iPhone.
Even after Apple did release the iPhone, the strategy behind Android was entirely focused on competing with Microsoft, not Apple. Google was terrified that Microsoft would get into the smartphone OS market and achieve a dominant position, and then muscle Google out of mobile search and advertising. That's why Android is open source (well, mostly). Google made the Android OS free for manufacturers to use with their phones as a way to get them to use Android instead of a Microsoft OS.
The strategy worked brilliantly. Android has done exactly what Google wanted it to accomplish. Microsoft has never gained any meaningful market share in the smartphone market. And between Android and various deals with Apple, Google has a tremendous presence with smartphone users.
No - they bought Android 2 years before the iPhone was announced, and 6-12 months before rumors about it appeared.
You're thinking of the apocryphal story that Google completely pivoted Android when Eric Schmidt heard about the iPhone at the last Apple board meeting before the iPhone announcement
