If the OEMs get mad and balk Google can just go ahead, buy HTC, and crank out in-house Nexus devices.
That didn't work so well with Motorola though.
Although I have to say the Nexus 6 I bought a few months ago has been my favorite Nexus phone by far.
On the one hand, if Google takes more control over the hardware and software of Nexus phones, it could be a boon for reducing fragmentation and for increasing security, performance and reliability for Nexus Android devices.
I dont get the connection to the fragmentation. To me, fragmentation is 1) several hardware vendors with their own variations on Android (their own launchers, apps, bloatware, etc.) and 2) all devices that do not have an upgrade to the most current base Android OS (some phones take the better part of a year to see an upgrade to an
older version, and others are never upgraded at all, whereas Nexus owners get it shortly after release).
On the other hand, it's possible that the various potential Nexus OEMs (like LG, HTC, Samsung, etc) might balk at the idea that they have to give up more control to Google.
I guess I'm saying above that if Nexus phones are already built to a hardware spec under contract, why would the manufacturers care? Android is software/firmware, not hardware. I don't see the connection. The only thing I might see is where Google might require a specific chipset or processor to enable security/privacy features but even there, it's under a manufacturing contract. And if that's the case, LG, Samsung, Motorola, etc. might see the benefits and use this themselves. Google wanting to control how its own hardware is built does not seem like much of an issue; if anything, it will only make Nexus phones more expensive.
I figure the Nexus is just one product line of competitive phones up against the giants. My only fear, though, is that if the curretn manufactuers do not play along, the Nexus line will end up with some little-known manufacturer that makes substandard hardware. But manufacturers are hungry for business, so I don't see many of them balking at it.