I wouldn't be so quick to discount the idea of doing everything on your own. (Besides, they aren't exactly making all of the components on their own...just ones they believe they can improve upon)
Judging by Apple's rapid increase in portable computer sales in the last decade, I think many would say "picking a battle against the entire industry" hasn't worked out too terribly for them. Apple's one-model approach for mobile devices (with a small set of possible hardware configurations) has and will continue to pay off big for development purposes and will allow for more advanced features to be integrated thoroughly and simply across the platform more quickly (examples - GPS & gyro now & touch sensitive back & NFC technologies in the future).
The bottom line is that I would expect Android to continue to push the industry forward on many specification style features like high quality cameras, speedy hardware, and storage space while the iPhone will have more "leapfrogging" features like the examples listed above. Android software implementations will probably continue to be piecemeal while the iPhone implementations will be more thoughtful yet limited. (example - push notifications & UI)
Just to be sure, I wasn't discounting them - as I said it remains to be seen how they scale to the DIY challenges that I mentioned. Also the impact of any limitations resulting from these scale issues (if they prove to be a problem) may not be that much in terms of lost sales - as more than anything Apple's success lies in building brand loyalty and the Apple customers may choose to live with those limits. But it will pose problems for them if they target rapid sales growth outside the US.
Judging by Apple's rapid increase in portable computer sales in the last decade, I think many would say "picking a battle against the entire industry" hasn't worked out too terribly for them. Apple's one-model approach for mobile devices (with a small set of possible hardware configurations) has and will continue to pay off big for development purposes and will allow for more advanced features to be integrated thoroughly and simply across the platform more quickly (examples - GPS & gyro now & touch sensitive back & NFC technologies in the future).
The bottom line is that I would expect Android to continue to push the industry forward on many specification style features like high quality cameras, speedy hardware, and storage space while the iPhone will have more "leapfrogging" features like the examples listed above. Android software implementations will probably continue to be piecemeal while the iPhone implementations will be more thoughtful yet limited. (example - push notifications & UI)
There's a great article about Apple and vertical integration (specifically the PA Semi acquisition) here: http://www.forbes.com/2008/04/24/mitra-apple-pasemi-tech-ent...