Probably, given that Microsoft has never made money on Windows Mobile -- minuscule licensing costs coupled with a high engineering price. In their brightest expectations I don't think they see themselves making money with it.

Microsoft's mobile efforts have always been about the ecosystem. Office, Exchange, Windows security technologies, and now the xbox platform (though I still marvel that having your xbox achievements available for perusal was thought to be a big feature of WP7). Given that approach, Android can serve that purpose even without royalties.