A custom board assembly is much cheaper to manufacture. For instance, for a recent design, the only chip used off a full Arduino board was the microcontroller itself (and then in a different, smaller package).

Physical and electrical constraints are often significant. And that's before getting into all the issues involved with firmware and IP.

I love the idea of open-source (hardware and software) consumer appliances, but everything is stacked against it. Primarily economies of scale.

Further more, standard high volume stuff usually sees much more competition and investment by chip companies, who are really the ones doing the deep r&d in this industry.