android' is not recognized as an internal or external command

Your guess is correct, just add the folder containing android.bat(tools folder) to the PATH. Otherwise the system will not be able to find the program.

Other possibility is change directory (using cd) to the tools folder, and execute the command from there. Since the current directory (whatever it is) is usually in the PATH, the system will find it. But this is not handy, because you frequently want to execute this command being in a different directory.

Find android.bat on your system. On mine (win 8 x64) it's under C:\Users\{username}\AppData\Local\Android\sdk\tools\android.bat

Open a command console, and use the 'doskey' command:

doskey android=C:\Users\{username}\AppData\Local\Android\sdk\tools\android.bat $*

This will continue to work in the open command console. To make it permanent is more difficult: http://darkforge.blogspot.com/2010/08/permanent-windows-command-line-aliases.html

You can also try adding it to your PATH as another poster suggested, but that didn't work for me. I recommend an easy gui for doing it, such as https://patheditor2.codeplex.com/

In Windows 7, navigate to

Control Panel\System and Security\System > advance system settings > environment variables

and update the path to include the following:

<android-root>\android-sdk-windows\tools

Use semicolons to separate paths if more than one exist.