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Well, it's technically possible to get a virus on any computer, but the risk to Android phones is extremely low so far. Nothing in the wild but a couple trojans, and you'll have to be pretty careless to download them.
Get your apps from the Market and/or research anything you side load.
As an experienced software dev, no approval process will stop the most determined bad-guys out there. The security model on android helps somewhat, but unless your average user is willing to take a pass on the next free, wiz-bang app because they are uncomfortable with all of the permissions the app requests, it won't do any good. It's getting to the point these where every app seems to request every permission under the sun, even when it makes little sense to the user based on the functionality of the app.
I don’t want to stir up irrational fear, but it is a real threat.
I still think back to that paper outlining a technique to hide malicious code in a C compiler that can detect when it is compiling itself and re-inject the bad code in the result. These days if you are clever enough, most anything is possible.
I heard neither avg or lookout will work because there's this video on youtube where a guy opens a virus infected app called" sexy girl" it loads the bad files on the sd and sends sms he trys to see if avg picks it up it doesn't lookout doesn't either then he finally uses this one app and it finds it
It's a mixed bag m8. In order for some applications to function properly on a little phone that also wants to be a little computer, they require access to what may seem like peculiar functions on the surface, but with a little careful deliberation can be usually be understood pretty readily.
In the Marketplace between doing a bit of homework (dev notoriety, web presence, discussions on forums like these, etc.) and reading the comments, one can pretty easily discern the wheat from the chaff.
When it comes to side-loading it's not a ton different. Dev reputation, usage, reviews, etc. are essential.
I'm sure this sounds like a vanillia, patronizing answer, but it's also just the way it is at the moment. The Marketplace is a mess, so it's on us to make good decisions.