Page: Motorola Mobility acquisition is key to Google's future

Google's CEO announced today that it has closed on its $12.5 billion purchase of Motorola and named former Americas chief Dennis Woodside to take the helm.

Anytime a company spends almost $13 billion for a company, it's news. And anytime Larry Page writes a blog, it's news. But today's announcement, made possible after Google finally cleared government scrutiny in the U.S. and China, is huge news. It is how Google aims to compete against Apple.

In his blog, Page predicts that mobile devices will replace desktop PCs, namely smartphones, including Motorola's hugely successsful Droid line, and tablets, where Motorola has failed to elevate Google's Android to the same stature. (Hence the buy)

See also: CNET: Google closes $12.5B deal | A daunting to-do list ahead | Google: We now own Motorola Mobility | Android tablet surge will be led by Google-Motorola, HP, Dell | The tablet revolution is coming

"We all remember Motorola’s StarTAC, which at the time seemed tiny and showed the real potential of these devices. And as a company who made a big, early bet on Android, Motorola has become an incredibly valuable partner to Google," Larry Page wrote today in an announcement. "It’s a well known fact that people tend to overestimate the impact technology will have in the short term, but underestimate its significance in the longer term. Many users coming online today may never use a desktop machine, and the impact of that transition will be profound--as will the ability to just tap and pay with your phone."

No one underestimates the importance of this buy to Google's future.

Google is now a hardware company. Its decision to marry its massive software business with hardware, a model championed by Apple and passed over by Microsoft, will have long term ramifications for the company and indeed the entire ecosystem around Android and Chrome.

Compared to Apple's iPad, Motorola's Xoom has been a market flop. Google's next, next generation Android tablet has to be much better.

The combined company has been making some improvements in the sales and marketing of the tablet, such as the "Ice Cream Sandwich" of Android now available on Motorola's Xoom, and devising a strong, comprehensive strategy that melds Google's Chrome and Android software (and enterprise applications) with Motorola Droid and Xoom lines. The $449 price cut on the Xoom also helped.

I am a longtime Droid owner and occasional iPad user who has longed for a viable Motorola tablet that can compete head on against Apple. I have hesitated on a tablet buy in part because I am awaiting a blockbuster next generation Xoom that runs a much better Android, in more elegant fashion, the way the iPad does. I want it to run Chrome well, enterprise apps well and to see some amazing innovations in the Google software space, due to the additional points of integration enabled by the marriage of Google's software with Motorola's mobile hardware.

I was also an early owner of Motorola's StarTAC. I like my Droid but continue to run into snags that sometimes require a phone reboot. That may have been acceptable in the early days of the PC but they're not in the mobile device era.

Becoming a smartphone and tablet manufacturer will have a huge impact on Google's OEM relationships, and probably not for the better.

I would argue that it's critical for Google to raise its stature in the open source side of the business. Getting developer buy-in for the next round of competition, in the cloud era, is huge. It appears the company is working harder to become a better citizen in this community. The Android code is back in the Linux kernel. Google continues to invest in leading open source projects such as Firefox. But the company has a ways to go to shed its proprietary image in the pure open source community.