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It's already $4 with the new ESP8266-EX from WeMos!

Full WiFi stack, 11x GPIO, Analog in, SPI, I2C, 80/160Mhz, 4MB Flash, power/flashing over USB, supported by the Arduino IDE, or just use the NodeMCU Lua firmware with modules for most sensors, displays, MQTT etc. I'm having a blast with them right now.

(Edit: http://www.wemos.cc/wiki/doku.php?id=en:d1_mini)

WTF is WeMos? ESP8266 module itself costs below $2

Ummm, I believe it's a board you can surface mount the ESP8266 on to.

The Raspberry Pi Model B has typically been around $35, not $5.

As the other poster mentioned, they've typically been $35. The barrier of entry for IoT is still pretty low though, you can get an ESP8266 for ~$2/ea. That'll handle wifi and can also be your application processor. For another ~$2-3 you could add on a BLE module too.

ESP32 is coming with both Wi-Fi and BLE: http://espressif.com/products/hardware/esp32/overview

Nice!

This looks like a full board with ethernet and all the extras. I doubt it will be $5.