Motorola already have a phone that's better than the iPhone, it's called the RAZR HD.

Google is taking a big risk here by potentially annoying the brands that are loyal to Android.
Motorola's software that they lay over Android is terrible, slow, buggy, and takes up too much space (some phones could not be updated because they lacked the memory to run both Android and Motorola bloatware together). So that will need fixing.
It is not just a phone and its spec's that you are selling to the customer, Apple sells a massive music and apps library and has other new gimmicks to get people to upgrade like Siri, which it bought. So Google will need some kind of gimmick that people really want - the reason phones sell is desirability, not need or quality.

"Motorola already have a phone that's better than the iPhone, it's called the RAZR HD."
This is a classic example of cognative bias.
The verge - iPhone 5 (8.8) Razr hd (7.6) Tech radar - iPhone 5 (4.5) Razr hd (4) Cnet - iPhone 5 (4). Razr hd (4) Hothardware - iPhone 5 (4.5) Razr hd (4)
" cognitive bias is a pattern of deviation in judgment that occurs in particular situations, which may sometimes lead to perceptual distortion, inaccurate judgment, illogical interpretation, or what is broadly called irrationality. It result from a lack of appropriate mental mechanisms (bounded rationality), or simply from a limited capacity for information processing. "

Sooner or later, Motorola is going to make the Nexus phone. Google has already use HTC, Samsung and LG to build its Nexus phones. Google now knows exactly what these manufactures could or could not do. Nexus 4 is a great phone and in short supply since its release. Nexus 5 might be the one to watch out for if Motorola is going to build it.

@Wiseguy
The Razr HD is nice but still not quite as good as the S3 that came out before it.

1) is this not the reason Google bought Motorola?
2) Samsung is a marketing machine, with marketing approaching 12 billion a year (no other tech company comes close). If memory serves this is about a year of Googles profit. www.asymco.com/2012/11/29/the-cost-of-selling-galaxies/

@Inappropriate Response, I'm sure I could find websites that were Android biased to prove Motorola is better. How's the NFC working for you? What about the maps? Directed you into any lakes lately? You can always install Google maps. No need to be embarrassed.
@Diachi, Yeah the S3 is nice, bit too big for my liking. The build quality isn't as good as the Motorola. I like the clean look of the RAZR, no buttons on the front. Carbon fibre on the back. Pretty sweet.

@wiseguy
actually those are the first 5 sites that come up with google search that have a star rating to show the comparison, but thinking that i've specifically searched out pro apple sites doesn't surprise me.

Apple is out of the game, so its left with Samsung and Android. Its a good hardware manufacturer but not mobile OS. This is why Samsung is slao making windows phone, as an insurance.
Would Google sit around there letting Samsung reap fat profit from Android? No. It's time Google make its final move - release a Samsung killer.

While this product will be nice, no catch up product ever surpasses the first one on the block. This is something Google just can't seem to wrap its head around. It's sad because Google has the resource, the financial means and energy to truly sit down and innovate but instead chooses to beat the best product out there. Stop copying and improving, start innovating I say!