I do think they might sell bellow cost. Of course, it's illegal to say it so they claim it's at cost. Amazon even brags there is no margin: http://www.forbes.com/sites/timworstall/2012/10/12/amazon-ma... but I wonder, if they are so desperate for market share, wouldn't get go a bit further. I think they do.
Moreover, google and amazon do NOT sell below cost. They are near cost, for the cheapest version, at launch. Go look at how much tablets sell for in China if you think their tablets are below cost. (or miumiu phones).