Of course they use off the shelf parts. Everyone does. Even companies like IBM that design their own CPUs use other off the shelf parts in their final products. That's just the way the world works and always has. I'm an electrical engineer myself which means I design hardware all day. I use off the shelf parts to do that. That doesn't detract from the design process at all. When I said manufacturing, I was referring to contract manufacturing/assembly. IBM and Intel are not manufacturers for Apple, they're parts suppliers. There is a huge difference. It's like the difference between a construction contractor and a lumber company. The architect designs with the lumber company's material in mind, and hires a construction company to put the house together. The house is still fully the architect's design though. As long as he chooses a competent contractor and makes sure they use high quality lumber, it doesn't really matter at all who they are, they just need to follow instructions. That's all I mean.
In this case, Apple and Google are the architects. The difference is, Apple has been designing excellent hardware and user interface software for 30 years. Google has been designing excellent data management software, mediocre interface software and non-existant (consumer) hardware for <10 years. They've got a long ways to go before they can match Apple, in my opinion anyway. I sincerely hope they do release a phone and that it's excellent if for no other reason than that it will spur Apple on to make the iPhone even better. I'm just not optimistic that they'll be able to, at least not for a while.
Note: Before someone picks apart my metaphor, I realize that it's not perfect. No metaphor is. I think it gets the idea across.
Excellent Post. I understand and agree.