It might. This is obviously Google's intent in subsidizing the hardware so they are selling it barely above cost.
The big thing is going to be Apple's reaction to this. Apple is doing a few things right (introducing a smaller iPad which should be able to come close to competing to the Nexus 7) and a few things wrong (alienating their entire installed base of devices by changing the "standard Apple connector" to an incompatible connector that is also not an industry standard like USB Micro).
Apple took the early risks in coming forward with the implementation (if not the concept) of the fondleslabs we all enjoy, both in small form and large. As a result, they enjoyed a starting lead out of the gate. They also have a few market advantages like a monolithic model lineup (basically boiling down to "how much memory do you want?"), and more consistent support for software upgrades (since all devices are from a single vendor).
Apple's biggest problem is that they must remain "all things to all people" in order to maintain a leadership position, and they are competing against multiple players who are also each competing against the other. ONE killer device like the Nexus 7 could knock them cleanly off the podium.
Their second-biggest problem is the timing of their hardware shift to the new connector port. Many thousands of people spent good money buying devices that accept Apple devices specifically because the form-factor across all Apple devices is similar enough that a simple shim (at worst) could make a clock radio take both an iPod Gen 2 and an iPhone 4S. You'll see a certain percentage of the population say "hell, if I have to plug in an adapter and have a cable and leave my device lying next to the clock radio, why not buy this Android tablet for $100 less and use USB?
But they've still got an established base of iTunes users with their music and media locked (*) into that infrastructure, so the battle is going to really be interesting over the next 12-18 months. This Christmas is going to be a lot of fun to watch. Apple will probably have the iPhone 5 and the iPad Mini, but Google just shook the foundations of the Android fondleslab market and I do not expect Amazon to sit back and watch their Kindle Fire get upstaged due to the potential massive loss of media sales. I fully expect a $200 16GB decent-spec Fire from Amazon in the very near future, and Samsung isn't going to take this sitting down either.
(*) I realize that you can extract Apple's FLAC files into MP3s, but last I knew this was, like the Google Play Store, a song-by-song manual process - not something most people would approach casually if it was "only" going to save them a little money.
The Nexus 7 does have one bad thing - reports of poor gluing of the screen - this could prompt a bit of a backlash if too many bad units end up out in the field.
Apple's iPod Mini will sell, but the question is how much loss are they willing to take this Christmas to keep the iPod on top of the podium? Because they're going to be late to the game in the 7-to-8 inch space, and their product is probably going to cost a good chunk more. The 7-inch tablet is not going to be seen as a long-term investment like the 10-incher by then, since there will probably be at least a half dozen viable feature-rich $200 7-inchers and more than a few $100 adequate e-readers (say something with a TFT screen, a 1GHz single-core processor, 16GB RAM, front-facing camera, SD port, and decent 6-to-8-hour battery).
If Apple walks in with a $300-350 competitor four months after everyone has gotten used to the devices costing $200 or even less, they'll still have a die-hard fan base who will sell out the initial build run in a few days.
But they'll have lost that first-to-market edge that they've enjoyed for quite some time now.
Gonna be a fun year no matter what, and a good year for us consumers because the big players are finally competing in the tablet space.