It's not sold at a loss, but with a very low profit margin. At a loss would mean that they're actually bearing the cost of manufacturing the device even after they got your money, which is not true.
They also get a much higher profit margin on the 16gb (now the 32gb for the Nexus 7) than on the 8gb which is what a lot of people will buy. There isn't a $50 cost in manufacturing a device with 16gb more of storage but there is a $50 markup for the customers who want more local storage. Storage is much, much cheaper than what you're paying for when you buy a tablet or phone with bigger SSDs. The profit margins on the 64gb iPhones are INSANE compared to the profit margins on the 16gb.
The base, $300 Nexus 4 is going to have a paltry 8gb. Most of the heavy users are going to spend the $50 more for the 16gb, while the $300 will still be there to please those who have to be more careful with their money.
They also get a much higher profit margin on the 16gb (now the 32gb for the Nexus 7) than on the 8gb which is what a lot of people will buy. There isn't a $50 cost in manufacturing a device with 16gb more of storage but there is a $50 markup for the customers who want more local storage. Storage is much, much cheaper than what you're paying for when you buy a tablet or phone with bigger SSDs. The profit margins on the 64gb iPhones are INSANE compared to the profit margins on the 16gb.
The base, $300 Nexus 4 is going to have a paltry 8gb. Most of the heavy users are going to spend the $50 more for the 16gb, while the $300 will still be there to please those who have to be more careful with their money.