The point of Kyocera's newly announced Android phone is to be the first pre-paid Android smartphone in the USA. It will be sold for $169 at Virgin Mobile, Cricket and MetroPCS. No contracts. The phone might be SIM-locked to that pre-paid carrier, but there is no subscription plans required to have an Android smart phone.
The fact is that Android phones cost around $150 to manufacture at the moment. The Nexus One might cost $50 more than Kyocera's phone to manufacture (perhaps $175 vs $125), due to the more expensive components. But in general, the cost of parts and manufacturing is around $150.
Same with Android or Chrome OS on ARM processors for Laptops and Tablets. Those can also be manufactured for around $150 or even less if you don't include the 3G modem in the device and use the lowest quality components.
Of course Google can subsidize the price of the devices with advertising. In fact, I think we can expect Google will sell $99 Android Phones and $99 Chrome OS laptops on google.com/phone and google.com/laptop within long.
For Internet access, there will be pre-paid deals for using 3G and LTE networks without contracts, and there will be WiFi-only devices or 700mhz White Spaces ones in those products, to thus route the VOIP through data and provide near-free wireless broadband usage on these products. So $99 devices without contracts, without subscription plans is doable.
The question is only how soon does Google want to disrupt the whole market?