Supporting Android is a surefire way to kill Windows on mobile. To everyone in the press it would be perceived as an acknowledgement that Microsoft has failed at breaking in to mobile. Worse still, Google will never play nice with Microsoft and the move would be fraught with endless problems.
It is ridiculous how people are quick to dismiss technology in its infancy. It's akin to people dismissing the automobile in 1886. Continuum is something new with massive potential that will take time to flesh out. Just because it might not currently suit your needs doesn't mean it won't eventually evolve into something incredibly useful.
A friend of mine in IT thinks that something like Continuum is a lot closer to adoption than we realize; particularly in enterprise. And regardless, I think it's an inevitability that hardware will merge into singular devices. At this point it's more a matter of who gets there first.
Microsoft's challenge has always been that while they're quick to market with new ideas they're slow to turn those ideas into viable, reliable products. That leaves the door wide open for someone to jump in with a more refined product and steal the prize. I think back to Windows tablets back in 2002. A ton of potential, but those devices were terribly clunky. Eventually Apple came along with the iPad and got it right.
Hopefully Microsoft will get things right with Continuum, but in the meantime it's arguably a product in beta. That doesn't negate it's potential. It just means that Microsoft shouldn't be pinning mobile on that particular feature just yet. Let it sit there in the background and garner attention as it improves, but they've got more immediate things to worry about. Namely getting these devices in the hands of the consumer and, critically, addressing the app gap.
Ballmer has some legitimate concerns, but given his track record over the past 15 years I don't think he has a right to be so critical.