2008 was a simpler time. Apple's iOS was the big, hulking juggernaut lumbering o'er the land and threatening to suck all of the world up into its tightly-clenched grip. Android was its shining counterpoint. Crude, but imaginative. Promising, but outnumbered and very badly out-gunned. It was the Open Source Underdog. An 'open' platform to combat Apple's 'closed' one.
Here's the truth: Android isn't truly 'open'. Not in the way something like Debian is. Google has tight control over what becomes an official Android device, with access to the App Market. And Google also controls when and how each version of the OS is distributed to the open source community. They aren't above parceling source code out to their business partners while holding it back from everyone else.
Motorola has access to the Android Honeycomb source code. Samsung and LG do as well. They've been working on Android 3.0 tablets, so Google made an exception. Even though Honeycomb wasn't ready for market. Flash capability wasn't working as of the Xoom's launch. You still can't use microSD cards with 3.0. The sad fact is, Honeycomb was half-baked when the world first got ahold of it.
And it still isn't ready. Which is why Google has closed the source code for the time being. Apparently Android 3.0 was ready enough for people to spend $800 on, but not ready enough for the loyal Android community to work with.
But as bad as it sounds, Google may have made the right decision here. From a business standpoint, at least. Releasing the 3.0 source code would have allowed little bitty low-end gadget makers from all around the world to pump out cheap "Android Honeycomb" tablets. They'd ride the iPad 2's coat-tails to moderate financial success...and sully the name of the entire platform by associating it with knock-off pieces of crap.
This is a hard move for an open source nerd to take, especially coming from a fallen messiah like Google. But as they've shown time and time again, the "principles" behind Android can be compromised the minute they prove impractical. Android didn't get to be the #1 smartphone platform on Earth by pleasing idealists.