I understand that Google Play Services has it's own APIs delivered independently of the OS, but surely there are OS specific APIs as well. No? If not, what's the purpose of incrementing the API version with each new release?
From what I can tell, after doing yet more reading, is that Google Play Services is the gateway to Google's walled garden. For example:
- Google Maps API
- Play Games API
- In App Billing
- Google+ Sign-In
- etc. See linked pic below from ars.
The Framework APIs, however, handle things like button drawing, touch interface, notifications. And those, via the Support Library, can be built in to each individual app. (I assume there are app size implications to this.)
So if Google introduces some cool animated transparent accelerometer-aware scrollbar thingy, it'll be part of the Framework API and considered a part of the Android OS. But it'll also likely be available to developers as part of the Support Library, which includes the code for the scrollbar thingy in the app itself rather than having to rely on the OS doing it. (And like the above app size implication I speculate about above, I assume there are performance implications for this as well.)

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We never had an objective to sell a low-cost phone, says Cook. Our primary objective is to sell a great phone and provide a great experience, and we figured out a way to do it at a lower cost.
Cook never said that??
FWasan't the iPhone 5C origionally said for the China market?
Said by whom? Random internet tech bloggers and forum posters? Yes. Apple? No, not that I know of.
Didn't Cook even say "We want a more affordable iPhone they can aford."
No, not that I've been able to find. Do you have a link to a press release or interview?