According to statements from Android head Andy Rubin, the Google Nexus 7 tablet will not be making any money on the sale of the hardware. Apparently, the sell through price on the Google Play Store is a break even amount with $0 in actual profit. Rubin said, “When it gets sold through the Play store, there’s no margin, it just basically gets [sold] through.” In fact, in the interview he made it clear that Google is absorbing all of the costs of the device, and that it could end up being a net loss per unit for the hardware. Google's whole goal is to build an ecosystem of content to eventually rival Amazon. They intend to make money by promoting content sales through the Google Play marketplace. They have even added magazines, books and TV shows to their lineup of movies, music and more.
Source: NexusTablets.net via BGR