Google's intention is to improve Android, because that's how they make their money: People using Android, and sending their data to Google so Google can sell ads. Google doesn't make their money selling consumer hardware; that's more of a side business, and is really there to push Android forward, so more people use Android, so more data gets slurped up by Google.

They don't need to improve Android that way. Google already know how to push Android forward through marketing research. Even though $1 billion dollar is a penny to Google, they didn't have to go through all that trouble if they want to "improve Android." You have look at the diverse investment Google has made. They want to try new things by looking at IP and acquiring talents. That's all the agreement is all about. Google business team isn't a group of third-graders.

The Motorola acquisition was both desire to exercise the IP and as a mean to defend patent wars. But people thought they were all about making new phones (which can always make more money and more ad money). In the end engineers got transferred to other teams within Google.

Of course they want to move into consumer hardware for the exact reason you listed: sell more ads. They got certain group of engineers so they can work on projects Google either haven't revealed or improving existing hardware projects, most of the code will remain proprietary. You don't see most of the Google Home code in open source Android codebase, except whatever Google believes are valuable for the community.

There is no altruism here. Otherwise there would not be any patents and any licenses except "no license" license. I suggest those downvoted me please think about why software companies want to move into consumer products in the end. Why is FB building hardware? Why Kindle in the first place? Why Google Home or Amazon Echo? Read up various highly regarded analysts' reviews on new sites. Those people do better analysis than I do here.