Google has been playing the game carefully and skeptically. The targetted audience is a wider group of people. Nexus 7 hardware came from ASUS who were the best in the android tablet manufacturing.
Nexus 7 is a tablet. A 7 inch one..
Nexus 4 is a smartphone. A 4 inch one..
nexus 4 hardware comes from LG. For the given features, the pricing strategy is similar to Nexus 7. Competitively priced.
Common question which we should ask. Are they subsidizing the price? are they kind towards customers?
The answer which was given by many was, in course of time the customers will pay some money back in the form of purchases from play store. These devices are oriented towards cloud. Some we may buy something and that will pay them back.
Another cool feature, the unlocked versions are available at lesser price. Price likely to be around 299$