I found today a news on Cnet titled Ballmer dismisses Google Android where the content of the news item is clearly described in its title. This kind of titles always attract to read further since usually when Microsoft dismisses something, I believe that something has a great future. It is amazing that Microsoft's CEO still holds the same position of disregarding things he does not understand (and his own words - "I don't really understand their strategy. Maybe somebody else does."). As far as I remember the last time he did not understand what Google does with search, that was the day he lost the battle on the search field.
Later on there is also another "funny" quote of him in regards to Google and here it is - "If I went to my shareholder meeting, my analyst meeting, and said, 'hey, we've just launched a new product that has no revenue model!'...I'm not sure that my investors would take that very well. But that's kind of what Google's telling their investors about Android," - again, if he would raise his head, he would that most of the things google does are free so why does he think their shareholders would be surprised or non supportive. he might be reflecting his own shareholders attitude where they are use to revenue based product and that is actually where they fall short.
As for Android (although my case above relates to anything Microsoft dismisses in vanity) did he maybe think, it can be their alternative OS for MS Windows with one difference - free. I know it is for mobile devices right now and a bit limited, but well, all devices are becoming mobile and given enough time it will have a laptop version as well.