Hi thinking was that people want clean, simple and minimal features and they would be willing to pay price for it (same as what Jobs might have said). But in reality, people buy high end phones for clean, simple and high end features. The problem is that developing last thing takes huge capital and long time. There is no way to compete with top dogs in high end market. If you are a small company, only viable way for you to succeed is keep the prices low and carve out a niche.

Also I am much more willing to ignore issues and quirks on a budget phone if it does what I care about.

If a flagship device came with glaring flaws - even in functionality I rarely use - no way I'm giving them the money unless it's really revolutionary in some other aspect I care about.

So working out initial problems on a budget phone makes sense.

You forgot "target emerging markets", which is an important reason that Xiaomi and Huawei have been successful.

Nexus phones also weren't really successful and weren't intended to be. They were intended to be development devices and for Google to show the direction that they wanted Android to go in. They also didn't build any of them in-house, they were made by HTC, Samsung, LG, Motorola, Huawei, and Asus.

Google's real entry into the smartphone market was with the Pixel which was a direct competitor to the iPhone.

Were the Google Nexus phones considered low-budget?

I have owned 10+ phones during the last 10 years, and the Nexus phones were only ones I bought new.

- Nexus 5 was low cost and amazing for the price. I was able to forgive every issue it had. And another international friend also asked me to buy it & ship it to her.

- The 5X was not low cost, but then it could also be bought cheaply through the Google Fi "loophole." I know at least one other person IRL who bought it through the loophole.

What was that loophole, exactly?

Normally the Nexus 5x was $400, but the cost of buying it through the Project Fi and cancel right away was $250. Now the loophole is with the Moto X4.

Well, none of them have been massive successes so I am not sure it is worth comparing them to Essential.

For long, Google has mostly sold nexuses in order to have demonstration devices of what Android could/should be.

Also, they needed dev devices for their engineers working on the next Android version anyway so it made sense to go the extra mile and sell a couple of them as well.

I don't think any of them has ever been low budget (below 200$); some have been middle budgets and some other high. The Nexus 4 has been introduced at 300$ IIRC but it was not the rule by any length.

Of course, the Nexus 4 cost $299 on launch

Generally, yes.