They will definitely lag in number of handsets, but will also completely destroy the Android players in terms of profit. If you consider the ecosystem as a whole, I am betting that Microsoft will also knock Android down into third-place in terms of third-party developer profit as well.
Google does not profit from Android, they profit through mobile advertising which has very little to do with a specific phone OS. The profit argument simply points out that the people who are producing Android phones have the lowest profit/handset in the industry and having a "sell more regardless of the low profit levels" strategy such as what Nokia used for the past decade is a recipe for disaster.
