Following a blowout quarter and entering a year where most expect Android to take over the world, Eric Schmidt is out at Google. It’s a bombshell that raises a ton of questions and speculation.

There’s no question in my mind that Schmidt was no longer welcome — perhaps also no longer comfortable — as CEO. Nicholas Carson says he was not always in charge anyway.

Why is this happening at all, let alone now? A lot of us wonder if this will result in Google being more or less “evil.” I don’t know enough about the company or its leaders to decide that right now, but I do believe that Google has finally become image-conscious, and the “evil” controversies of late play into that. I also think the founders are concerned enough about the company’s focus and direction to make this change.

2010 was a rough year for Google’s image. As head of the company, Schmidt was beyond unapologetic, and borderline obtuse when discussing Street View, your driving privileges, and your privacy in general. PC World has a nice recap, nearly all of it from the last ten months.

Even Schmidt’s parting words were eye-opening until reading Scott Austin’s flashback. In the worst case it’s just another awkward comment from a Ph.D. with a history of making awkward comments. Either way, I find it representative of Google’s current PR problems, no thanks to the CEO.

And what of Sergey? The announcement says he “will devote his energy to strategic projects, in particular working on new products,” but features no quotes from him. While it’s not unusual for technical folks to roll their sleeves back up, this arrangement strikes me as what I’ll call “the Wozniak treatment”: thanks for getting us here, now go play in your lab and don’t worry about anything else.

I think focus has become a big issue. Google is an engineering-driven organization that publicly announces more doomed products in a year than most companies do in their lifetimes, all ostensibly in the name of research and creativity. Perhaps the stated goal to “streamline decision making” refers to inefficiencies at a lower level that led to these failures. To me, Google’s decision making needs more no’s; I haven’t decided whether or not this is what they mean by “streamline.”

In the meantime, the flagship product is suffering. Bing is rapidly gaining share (at Yahoo’s expense… for now) while Google search takes shots on quality and relevance. The Groupon incident suggests that Google is starting to get uncomfortable with its one-dimensional cash cow: yesterday’s earnings report shows advertising steadily hovering around 96% of annual revenue. It would seem that way too many hours are being wasted while there’s real business to be done.

Is Google in trouble? Hardly, as the quarterly results tell us. But I don’t think Larry and the board believe everything is right either, and I don’t think they want to wait until the trouble is big. If that’s what we’re seeing here, then I think it’s very good for Google’s future.