He also said Google is positioning itself to earn $10 billion or more per year in the mobile device business, thanks to its Android operating system.

Google is giving away the Android software for free to device makers, who are using it to power dozens of popular devices. By spreading Android, which is growing at a rate of 160,000 new handset activations per day, the company ensures that its Internet search, maps and other ad-supported services will endure as users shift to mobile devices.

“If we have a billion people using Android, you think we can’t make money from that?” Schmidt asked rhetorically. All it would take, he said, is $10 per user per year. Among other things, Google might earn such sums from selling access to digital content from newspapers.

Two things stick out about that statement to me:

1. One billion is a huge number.  A few years ago there were 1 billion mobile devices on the planet.  Steve Jobs said he wanted to reach 1% of those devices by selling iPhones to 10 million users in a year.  He’s done that.  This feat, though there are many more mobile users now, seems pretty daunting.  Google would need to sell nearly half of the world’s mobile devices.  In a few years, mobile devices might reach 5 billion people.  So that makes it easier.

At its current 160,000 phones activated per day, it will take Google 17 years to reach a billion (assuming no one buys two).  But, at 10 times that rate, 1.6 million phones/day, they get there in under two years.

Also, Android isn’t just phones anymore.  Soon it will also be TVs, tablets, Smartbooks and maybe even devices like toasters.  That makes 1 billion devices seem more palatable.

2. Android is currently free.  How does Google plan to make that $10/device.  Advertising seems like an obvious choice, but Google makes money on search queries from any web device.  How does Google differentiate that into specifics on an Android device.

Maps? I think map advertising is an area where Google has a lot of room to run.  Currently a number of devices, including Apple’s iPhone, use Google’s mapping API free of charge.  What if those maps suddenly bore some helpful advertising?

Music? Google’s music store is coming soon.  Google knows Cloud.  A few bucks per person from an Android music store isn’t too much to ask.

Data Backups? One of the value adds of Andy Rubin’s Danger platform and the original Android model was paid-for cloud storage for documents and files.  That way, you lose your device and you automatically have it all back when you log into your next device.  Google currently gives you 1GB of free storage.  How much would you pay for 10GB?  100GB?

Phone service? Google voice could become a full Skype-killer type of service in the coming years.  In fact with Google’s recent pickups including Gizmo5 and Global IP Solutions, it is a no-brainer that this happens.  Would you pay $10 a year for a Skype like service (One that currently costs $60 at Skype)?

I’m sure there are many more ways to make a few bucks to choose from.  I think the 1 Billion Android devices scale might be the more daunting task.

Look for more from Fortune on Google’s next big thing…coming soon.