The mobile contract model you describe is identical in The UK.
Google could do two things to make it a lot better:
1. Force a minimum hardware specification (no more 3.2"-2.5" screens for starters), just like Microsoft have done.
2. Don't release Android until the OEMs are ready. It's entirely possible for Google to secretly give OEMs the latest Android and then wait until everyone is ready to let the public know. Imagine if the Galaxy S2 had ICS in weeks of Google releasing it to the public. Which incidentally since Google don't do that, they just make a big press event for an operating system most won't be able to actually use for months.
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