There are at least 3 separate arguments going here, and in many ways it goes back to the same arguments regarding PC/Mac a decade or two ago with many of the same conclusions.
I am a former Treo user (for years and years) and a former iPhone user. I came directly from the iPhone to the Mot Droid so I have some basis of experience.
Back in the Mac/PC wars you had almost identical arguments.
PC person: "Mac is going to be dominated by PC because you have a bazillion manufacturers making PC's and just one Apple. PC's give you more bang for the buck. More versatility in hardware (cheap to expensive/simple to complex/slow to fast etc...) whereas Mac gives you one flavor."
Mac person: "Mac is the better platform. It JUST WORKS, whereas you have to screw around and get patches and updates to make the PC's even come close to Mac in performance. PC is the imitator and Mac is the originator... etc..."
Did PC dominate the computing world?
Completely and inarguably.
Does that mean that the Mac was an inferior product?
No way. Windows got better and better the more it copied the Mac OS from day one.
Someone said in an earlier post that the iPhone is like a Mercedes...I think that is not a bad analogy. I think the iPhone is like one model of Mercedes (pick a good one...SL500 or whatever) with a couple of different year models.
The problem (just like with the PC wars) is that Android is the equivalent of Toyota/Lexus. It is the "Everyphone" because of the multiple manufacturers, multiple carriers, diverse price-points etc... The SL500 is arguably a very cool car but it cannot compete on total sales with Toyota/Lexus and their dozens of models. The SL500 cannot compete on overall user satisfaction with Toyota/Lexus because all these models suit a dozen different kinds of user or different demographics.
It is inevitable (in my opinion) that Android will crush iPhone in total sales by a many multiples within a few years. I would bet every dime I own on Android crushing EVERY smartphone operating system within 4 years. If someone wishes to take me up on a small wager PM me (I am semi serious about that...I could use some easy money).
Just like the Mac the iPhone is executed EXCELLENTLY in my opinion. It is polished and works very well at almost everything most of the time.
From an essential principle basis the iPhone business model's strength is also its weakness. Apple wish to control the I/O pathways of all of their devices and that was a BRILLIANT move on their part and has made them one of the most successful companies in America in recent years.
BUT, that is a huge limitation. The ability to use SD cards and easy wifi transfers to add and subtract data and applications is a KEY difference between the iPhone and nearly every Android device.
Also, from a security standpoint I do not like any phone that cannot have its battery removed. (Look into phonespy or similar products...your phone is never truly 100% secure/off unless the battery is removed...the right people (big brother at a minimum) can access your phone and listen to the room where it is at any time unless the battery is removed).
There are some systemic/essential/principle-based aspects of the Iphone that are not likely to change and, like the Mac, that is about CONTROL and the Android mindset is the opposite to that. Control gives you a nice, predictable safe platform. Freedom creates problems, but also attracts the greatest brain power, creativity, and will inevitably push limits beyond anything Mac/Apple/iPhone will ever see.
Cheers.