Why is that so "obvious," unless you have inside knowledge of how much LG's manufacturing cost is? Besides, it's the cost to the customer that we're talking about, or at least that's all that I care about. If Google is subsidizing the price, they are doing it with good reason and incentive. I think we are confusing whether the phone is worth a $500 price tag vs. whether that is its actual price.
LG's
phone page neither lists the Nexus 4 nor has a suggested retail price for it. Where did you find LG's suggested retail price? I'd be interested in seeing.
First of all, we don't know for a fact that Google is subsidizing the price. They may very well be selling at cost, but that's not the same as subsidizing it. Second, "we" may all be lining up even if the price was $500, but I doubt very much the overall demand would be the same with that price tag, at the initial launch. Actually, I would not be trying to buy it right away with a $500 price tag. I would be more than happy to stick it out with my Galaxy Nexus for a few more months, maybe even a year and wait for the price to either come down or get it second hand, or just wait for the next Nexus phone. Here's the difference: at $300/$350, I will happily get a new Nexus every year. At $500 or above, I will more than gladly spend 2 years between buying the phones. There's a reason Google held the price down to where it has.