> Why does it need to be Android? Make a phone that will send text messages and run a web browser
I think we're quite a ways past the point where most people would be satisfied with phones that only do voice, text, and web browsing. People have become quite accustomed to phones that can run arbitrary applications and games. There's quite a sizable population for whom phones are their only computing device.
There is nothing stopping it from running arbitrary applications, those applications just wouldn't be Android apps. Which is just as well because 99% of Android apps are just a bloated skin over a web page anyway.
I can't actually think of the last time that I wanted to (rather than was forced to) use a non-messaging non-browser app on my phone.