Photo by: Jason Hiner/CNET

Motorola Mobility CEO Sanjay Jha pulled off one of the most difficult things to do in the technology industry: He surprised people at a press conference.

When Jha took the stage at the Consumer Electronics Show 2011 and revealed the Motorola Atrix smartphone and the "Lapdock" that made it act like a laptop computer, it sent reporters scrambling. They expected the unveiling of the Motorola Xoom, the highly anticipated and already-leaked first official Android tablet to take on the Apple iPad. But, it was the Atrix and the Lapdock that stole the show.

Was this a hybrid smartphone/PC, the veritable missing link of computing? If so, how did it work?

The key was Motorola's homegrown software called "Webtop" that made the Atrix act like a computer once it was docked. When Webtop launched with the Atrix two months later, the obvious question was how Motorola beat platform giants Microsoft and Apple to the converged smartphone-PC device?

The answer is complicated but fascinating, and on the eve of Motorola Mobility's merger with Google, it leaves the combined companies in an enviable position. The success of Android has established Google as a key player in mobile computing devices, and once consumers and business users start looking to consolidate their many devices, Webtop could make Google the company that's best positioned to make that consolidation possible.

CNET and its sister site TechRepublic interviewed current and former Motorola and Google employees as well as industry experts to explain how Webtop emerged from a brainstorming session to become, potentially, a major weapon in the fight for dominance in the next generation of computing platforms. What emerged from our reporting is a clear picture of a technology that disappointed initially but may be about to spring into the mainstream.

The idea of using a phone as a fully functional computer has been around for more than a decade, of course. In the late 1990s, former Microsoft CEO Bill Gates often said a phone would eventually replace the big PC towers. More recently, Apple CEO Steve Jobs declared the arrival of the "Post-PC" era in 2010, as the iPad's surprising popularity began to erode overall PC sales.

Still, neither Microsoft nor Apple have made the leap to using their smartphones as PC replacements. That gives Motorola/Google a lot of running room as it waits for final regulatory approval from China.

The Secret Weapon

Webtop started in mid-2009 with a handful of engineers in Motorola's Sunnyvale, Calif., lab thinking about how they could get past the frustration of the mobile Web browsing experience.

"There are Web sites that simply don't work without a mouse," said Seang Chau, Motorola's chief software engineer. He and his engineers wanted to make that exasperating mobile experience a thing of the past. "It was just a few folks getting together and saying, 'What can we do?'"

Once they settled on a rough concept of a dockable phone with a desktop environment and a full Web browser embedded inside, Chau's team quickly "hacked something together."

Great idea. But the fate of the project hung on whether Chau could sell it to their CEO, Jha. First, Chau sent Jha video clips that showed the user experience for Webtop on very early prototypes. Then he explained in phone conversations that Webtop was meant to give a docked smartphone the "full Firefox browser including download and upload support, full Adobe Flash for desktop, and multi-window multitasking," said Chau. "At a high level, the key positioning was maximizing the user experience of your cell phone with a keyboard, mouse, and large screen."

Finally, Chau met with Jha and presented him with working prototypes. He showed how right-click, copy-and-paste, the scroll wheel, and window resizing all worked in Webtop just like they did on a PC.

Jha connected with the concept. "The moment he saw those demos, he wanted to go for it," Chau said.

Webtop would later be tied to the Atrix smartphone since the two products arrived in the market at the same time. But at that point, "We were working on Webtop before an Atrix ever existed," Chau said.

Jason Hiner/CNET

Just as Webtop was starting to take shape at Motorola at the end of 2009, AT&T sent out a confidential RFP to its smartphone hardware partners asking them to submit their best concepts for a "game-changing" Android device.

It was a proverbial "pivot" moment for AT&T. It wasn't offering any Android phones and its exclusive agreement with Apple for the iPhone was going to end in December 2010. What's more, AT&T's Windows Mobile and BlackBerry devices were running out of steam and it needed something it could put a lot of promotion behind. On Motorola's side, it had just launched the original Droid in partnership with Verizon. The Droid was the first Android 2.0 device and it was already a hot seller. The rest of the wireless industry suddenly wanted in on Android.

The match made sense. Motorola and AT&T execs had a private meeting in Las Vegas at CES 2010, where Motorola showed off its idea for a new device codenamed "Evora." AT&T liked what it saw and over the next two months the two companies went back and forth on details. In time, Motorola introduced the idea of adding something new to Evora called "Virgil" (the codename for Webtop). The Motorola team was excited about Virgil, but AT&T executives? Not so much.

It was time for another Chau demo. This time he had to convince AT&T CEO Ralph de la Vega. Chau flew to AT&T headquarters in Atlanta and went through his Webtop dog-and-pony show. The AT&T chief was hooked. "We've got to have this," Chau recounted de la Vega saying. "Webtop is something best experienced," Chau added. "It's hard to describe over the phone or even in slides. We did much better in person showing working prototypes."

Once AT&T was on board with the "Virgil" concept, the stage was set for the Atrix to become a spotlight-grabber.

By March 2010, Sprint and HTC were hogging the Android headlines at CTIA Wireless 2010 with the new HTC EVO phone and AT&T and Motorola needed an awnser. The Atrix was fast-tracked. A top phone launch usually has a lead time of 12-18 months in order to line up marketing and finish product development. The Atrix was shortened to about six months to get it ready for the holiday season. For the Webtop team, that meant dropping everything on their long-term development of the OS and focusing on getting the software to work on this one phone.

There were snags. One of the biggest was RAM. It turned out the phone was going to need way more RAM than even the most high-end smartphones in order to load Webtop alongside Android. Chau's team had to appeal to CEO Jha to get it.

"Without Sanjay's push, we wouldn't have gotten the RAM we needed," said Chau. "It's not cheap. We needed that kind of financial and organizational support."

Jha also had to provide the funding and executive backing for the special laptop docking device that the team was developing. It was going to be slim and slick, but it was going to be expensive to produce and it would have to be priced fairly high. But, the Motorola team thought that it would generate far more buzz than just a glorified desktop dock that attached to a monitor, mouse, and keyboard. There were already phones that were starting to connect to HDTVs (including the EVO). Jha agreed.

"Sanjay really pushed on the Lapdock," Chau said.

All the pushing worked. By the fall, the device moved into the testing stage and AT&T invited 10 CIOs from Fortune 500 companies to get a demo of the Atrix and Webtop. The consensus: You've got a winner if you integrate Citrix, an enterprise technology that allows companies to host desktop apps like Microsoft Office on servers and users simply connect to those servers and then run the apps from there.

Around the same time Citrix came up at the CIO pow-wow, AT&T told Motorola that it wanted to change the new device to add chips for HSPA+, its speed-boosting 3G service (AT&T would later spin it as 4G). This was a response to Verizon, which was about to launch LTE, a true 4G service.

The thinking was that if AT&T's flagship Android device went to market without the fastest wireless chips, customers wouldn't think it as a high-end device. AT&T and Motorola had a decision to make: Launch in time for the holiday season or delay the product to add Citrix and HSPA+? They bet on the two big additions and pushed the launch back to CES 2011 in January.

The launch was a success. Webtop caught the entire tech industry by surprise. Competitors didn't have anything like it. Both CNET and Engadget named the Atrix the "Best of CES" in smartphones.

My headline at the time was:

Breakthrough device of CES: Motorola Atrix = Phone + PC

Jason Hiner/CNET

The problem with Webtop

There was a hitch: The first version of Webtop was awful.

But, it was awful in the same way that Android 1.0 was awful. It was awful in the way the original MacBook Air was awful. You didn't want to use it right away, but once you tried it, you had a feeling that it was bursting with promise, and a sense of inevitability.

Unfortunately, Webtop could be so slow that it was practically unusable if you wanted to work with it for more than about an hour. It could lag at doing simple tasks like launching the Web browser or opening the Android app window that allowed you to use your mobile apps from within Webtop. Even though the Atrix was the first major smartphone to sport 1GB of RAM, it still felt unbearably sluggish in Webtop mode. Ultimately, Webtop was 1.0 software and it felt like 1.0 software.

Still, plenty of corporate customers decided to run trials. A year later, Motorola reports the number of companies testing Webtop devices has grown significantly, but none of these companies are willing to talk about it. (That's never a good sign.) While neither AT&T nor Motorola will release numbers on the sales of the original Atrix, it's safe to call it a disappointment. It generated tremendous buzz and got a lot of positive reviews from the tech press. But that was a grade on a curve, based more on potential than the device itself.

Nonetheless, as Google nears finalizing its acquisition of Motorola, the tide may be turning on sales of Webtop devices, and that could set up a huge opportunity for Google and Android to use Webtop to launch a full frontal attack on Apple and Microsoft.

What will Google do?

Webtop recently has made several big strides. After the tepid sales of the Atrix, Motorola launched Webtop on several other devices on multiple carriers during 2011: The Photon (Sprint), the Droid Bionic (Verizon), and the Atrix 2 (AT&T). Then, at the end of the 2011, Motorola quietly rolled out Webtop 2.0, tucked into the Motorola Droid Razr , a stylish, high-end LTE phone on Verizon.

Webtop 2.0 had several key improvements:

An updated version of Firefox.

Offline syncing for Google docs.

Webtop's App Bar became customizable.

Added the ability to see the battery life of both the phone and the dock simultaneously.

Improved the management of phone and dock charging.

Added VGA video-out capability (the common port used to connect to conference room projectors and many computer monitors).

Added support for more PC expansion ports.

Jason Hiner/CNET

After launching the updated version of the Webtop software in the Razr, Motorola unveiled a new version of the dock called the Lapdock 500 Pro that sported a 14-inch screen, a Web cam, a VGA video port, SD card slot, Ethernet jack, headphone jack, and even a set of Android shortcut keys on the keyboard. This made Webtop + Lapdock a much more viable PC replacement.

While the original Lapdock was thin, slick, and brushed metallic, the Lapdock 500 Pro had a more utilitarian look in the mode of a MacBook Pro or a business-class HP laptop. Most importantly, Motorola finally got the price right. The original Lapdock was $499. Motorola sells the Lapdock 500 for $349, but the price at Amazon and other retailers is $249. Verizon regularly runs specials where sells it for $149 when a customer buys it with a Motorola smartphone.

While AT&T eventually cooled on Webtop and the Lapdock after the disappointing sales of the Atrix and Atrix 2, Verizon, perhaps a better fit because of its Verizon Business division, carried on.

Verizon also looks at Webtop and the Lapdock as more than just an enterprise product. The carrier thinks it could be a tool for consumer technophiles and individual business professionals. In February, Verizon put a lot of promotion behind Webtop and the Lapdock by giving them a prominent spot in its Droid Razr commercials.

Verizon declined to comment on the sales numbers of its Webtop-powered phones or the Webtop accessories, but everyone I've spoken with at Verizon has been very familiar with the Lapdock and generally upbeat about it.

In March, I spoke with a sales representative at one of Verizon's large retail locations and asked if they were carrying the LapDock 500. He said the store was selling it, but since the new commercials started running the store was having a hard time keeping them in stock. However, smaller Verizon stores that I called said that they only sold the Lapdock 500 as a phone order item and didn't have any in stock.

Michelle Gilbert, public relations manager at Verizon Wireless, said, "We tend to see more business customers who travel a lot purchasing the LapDock 500 Pro."

Verizon is now the Webtop flag-bearer, selling four Motorola smartphones that run Webtop: Droid Razr , Droid Razr Maxx , Droid Bionic , and the Droid 4 .

So, now that Webtop is finally generating some momentum, the big question is what Google is going to do with Webtop once it completes its acquisition of Motorola Mobility in 2012?

There's one scenario with big implications: Google could integrate Webtop directly into the next version of Android so that virtually all future Android phones could be PC replacements. The technical barriers to doing this would be minimal. While Motorola has generally been coy about disclosing the technical details of Webtop, Chau revealed that Webtop and Android run on the same Linux kernel.

"They're not side-by-side," said Chau. "They're running together."

He also said that there's no virtualization involved. The bottom line: It would be relatively straightforward for Google to integrate Webtop into the native Android code without complicated software engineering. And, by the time Google would pull this off in the next major release of Android, dual core hardware will be standard on virtually all smartphones (with quad core on high-end smartphones), providing the power Webtop needs to run smoothly.

There's another x-factor: Google's ChromeOS. ChromeOS and Webtop are very similar animals. If you look at Google's Chromebooks and Motorola's Webtop + Lapdock, you see browser-centric operating systems based on Linux. It's all about giving users a fast, slimmed-down laptop experience. It lets you get on the Internet and access all of your Web apps and services in a traditional computer browser with a mouse and keyboard, but without all of the extra overhead and distraction of a full operating system like Windows or Mac.

Chromebooks have never taken off, of course, and from a technical standpoint ChromeOS and Android have no connection or integration. That's where Webtop comes in. Webtop could become the bridge between Android and ChromeOS. Google could merge the Webtop and ChromeOS teams, take the best of both of code bases -- the speed of ChromeOS and the fuller experience of Webtop -- and emerge with an empowered version of ChromeOS that is now integrated into Android.

In the smartphone war against Apple, this would give Android a feature the iPhone likely will not have any time soon. Appealing to consumers? Maybe. Many of them could replace an ailing old Windows PC with a dockable Android smartphone.

Appealing to business customers? Absolutely. Most companies are moving business apps to either the cloud or private browser-based apps. Webtop-enabled Android devices -- if they are well-orchestrated -- could take a big bite out of the corporate sales of Windows.

But it's no slam dunk. The fragmentation of Android and the fiasco of Android updates has shown that Google is not yet a master of working with hardware partners, and adding the complexity of a dual-purpose device will demand even stronger leadership from Google. It's going to have to get tougher and more persuasive with hardware makers.

There's also the question of convincing hardware partners -- many of whom would be cannibalizing sales of their own Windows PCs -- to get on board with this converged strategy. The best argument that Google will be able to make will be that the hardware makers can replace low-margin PC sales with high-margin mobile accessory sales (docks).

Perhaps the biggest problem is Webtop brain drain. In February, Webtop's biggest champion, Seang Chau, left Motorola just as U.S. and EU regulators were approving the Google deal. Chau jumped to Microsoft to lead the mobile division of Skype. While Sarah Gaeta, Motorola's director of product management for Webtop, said no one else has left the Webtop team, the loss of Chau was a body blow.

Google is still unwilling to talk about the trajectory of Webtop and how it could shape the future strategy of ChromeOS. But last Fall when Google announced that it was buying Motorola, it said, "The acquisition of Motorola Mobility, a dedicated Android partner, will enable Google to supercharge the Android ecosystem."

We're about to see how much they really mean it.