Major bold play by Larry Page and co. As explained in his letter this is a great move for giving Android a premium handset maker to showcase it's latest capabilities. It also enables Google to directly make it's own handsets, to have control over a hardware division that can cater handsets to any of the major carrier delivery protocols as well as create their own.
The best part of this though is the fact that from now on Motorola instead of or in addition to HTC will be Google's go to company for create thttp://www.blogger.com/img/blank.gifhe reference models for the latest and greatest from Android (the Nexus sets) and these will tell the market where to go as they'll likely have the newest stuff first.
Also, Google surely realizes the importance of leading on volume to gain market share. They used the volume play to define their main search business (to make money on ads) and they used that play again when they open sourced Android and gave it away to carriers to spread the OS love wider than any iOS or winmobile could. Now they are going to flatten things with the devices by making low cost Android based devices (I bet you.) With rumors of a low cost iOS phone swirling from Apple...you can bet some part of this choice had to do with trying to beat Apple to the punch on getting a cheap smart phone to market.
Also, factor in what is happening on the protocol side of things. The carriers hegemony of service access to the net is hinged on their ability to control the cell towers and meter access to their services by the various handset makers. Google has always believed that wifi is the best way to enable a smart phone to connect to the net (it's definitely the cheapest from the consumers pov and usually provides way better bandwidth), they tried their best but failed to get around the carriers when they angled for plan free versions of the Nexus when it first arrived (G1). With their own phone maker they can more directly address other access methods to the net via wireless devices and guess what was just ratified two weeks ago, 802.22. A protocol that promises to enable pretty much any one with a connection to the internet to enable wireless devices to connect through it across *miles* thanks to the re appropriation of the former frequencies used by analog tv. This will auger in a major shift in how wireless devices connect , enabling them for the first time to gain coverage without requiring the major telecoms which basically are in collusion...let's face it.
I refused to purchase a cell phone precisely because I knew the pricing for the services were all exorbitant (I studied communications engineering as an undergrad so I am familiar with much of the details). We are paying for massive executive salaries and big dividend distributions more than anything else....texting costs the telecoms zero, text goes in a side band sent with any transmission. voice has been digitized and takes up a fraction of the bandwidth it once did and more over many people rarely use it..."data" is the same thing that they use on the back end to send text and voice via IP so why they charge separately for it when they are using it in their other services...is the most egregious infraction. We are all being triple charged for a service that should be nearly cost free. In other countries the pricing is significantly lower for this troika of services but US regulations enable the telecoms freedom to gouge that is not allowed else where. Dishonest businesses ....Google with it's "don't be evil" mantra knows this and could be planning to get around them....they could conceivably become a carrier once 802.22 adoption kicks off by simply building their own access points using the new protocol. Motorola would be providing both cheap handsets and a dirt cheap network access (or enabling the cable companies to provide) method with wider coverage than cell towers. It would be an amazing boost to adoption of smart phones and would trigger development of IP based applications yet again. It would force the telecoms to compete on pricing and will embolden others to put up 802.22 access points...one could conceivably set up ones own telecom...enabling access per device connection mediated with software. This is ideally how it should work...enabling any phone to connect to any network provider and pay a per provider charge for the connection not a per application price for the application used. Texting , Voice are applications not distinct services and should be reflected that way in pricing...this deal has given Google a way to push that future forward and it only means good things for the consumer if so.