Clearly, $4 is far below the cost of the components listed. Assuming this is a legit offer - how are they doing it? One possible explanation - maybe it is supported by ads. They are counting on revenues generated by ads within the various applications - inlcuding search. If you notice the Search screen does not show a Google logo - it looks like a reskinned version of Google's home page. So presumably it could generate revenue via Adsense. Not sure if this is allowed as per Android Licensing terms for OEMs though but it could be an explanation.