Spot on. They should have found an existing model with good but not out of the ordinary specs (something like a 5" HD display, 2Gb RAM, etc.), appealing design, reasonably cheap (as in Nexus 4 cheap), and promised quick delivery. There's plenty of Chinese OEM or second-tier brands able to produce such phones here and now, and having owned a few most of them are good, sound devices hardware wise.

Then started working like mad on getting out a nice, user friendly, hackable OS to early adopters.

It's all in the OS, especially since nobody knows how the specs of the planned phone will compare to next year's models.