The money has to come from somewhere. In the case of Google search it is still you, just by the circuitous route of via the companies that buy advertising, who in turn you buy their products and services (the difference between this and a conventional business is that Google works for said companies, not for you, and that's not necessarily a good thing).
Very good point. Let's split the difference; Google has made something significantly cheaper than it was before, (which is a good thing), and moved it to an advertising model, (which is a mixed blessing).
We only have enough data for your point 2 - certainly an Android handset costs more than a typical GPS unit. Even if you get the handset "free" from the telco it's really paid for through your contract.
Mmmm. I wasn't referring to the hardware. I meant that they had made it cheaper to gather, process, store, and use location information. A guess, but considering how good they are at some aspects of efficiency, a reasonable one.
And while a Android handset costs more than a GPS unit, by combining it with other functions, you open up the potential for synergy, (Ugh. Why did the MBAs have to go an ruin so many good words), between applications.
TANSTAAFL.