I think it's actually illegal in the EU to sell products bellow cost. We call it dumping but it seems Amazon and Google are able to do it just fine in the US. So that might be one reason.
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).
Cool phone, LTE is a non issue for me since its not widely available here anyway and with the tiny amount of data your get here (i have 300Megs included in my contract after which it gets slowed down to dialup speeds) its kinda useless.
And a difference of 7% is substantial for a product with no margins.