Google CEO Eric Schmidt told a crowd of shareholders yesterday in Mountain View that 65,000 phones are shipped everyday with Google's cell phone operating system, Android.

And many analysts were shocked to learn Android equipped phones actually took over a larger share of the market than the iPhone in the first quarter of the year, according to a study released last Monday by the NPD Group.

Android sales are now 28 percent of the market compared to the iPhone's 21 percent, NPD reports. Phones using the Blackberry OS are at the top with 36 percent. Other firms had predicted much lower numbers for Android.

"It looks like Android is going to be either the number one or number two player," said Schmidt at the meeting about the free, open source operating system.

About the profitably of the endeavor, Google co-founder Larry Page told the crowd that Google makes money with Android "through more (Google) searches and other things that we do" and that "I think you'll see that as those products mature we'll figure out how to make more money from them."