Yes, there are other 3rd party manufacturers that sold devices based on such outdated versions up until recently. But why should it be Google's task to provide updates for these devices? That sounds like something that the manufacturers are supposed to do.
That being said, its extremely frustrating to see this happening.
Where? With the possible exception of China [1], after the Moto G and Android One, I'd expect that you could get a KitKat (or better) entry-level device pretty much anywhere.
[1] where there are entry-level KitKat devices, I'm just not sure of their quality since some major entry-level manufactureres (e.g. Xiaomi) are still on 4.2, not to mention that I wouldn't expect Google to go out of their way to support Chinese devices since they don't come with and generally can't use most Google services.
Xiaomi is running 4.3 on their cheapest device which would be the last device to get KitKat this month. Almost all their devices are running KitKat for a long time and they had released an unofficial testing ROM for 5.0 a week after the code was pushed. Xiaomi phones do come with Google services. Their flagship devices are expected a 5.0 early 2015. I would say they move faster than most brands.
I went from iPhone to their $100 model and find almost nothing that I could do before that I now cannot. Even in terms of performance and polish. Actually I can do slightly more thanks to Android Wear, but Xiaomi has less to do with that.
Most them are on 3G network and reception of a wifi network is an accident.
Right, because 4 year old electronics might just as well go into the landfill and if someone is dumb enough to use them still we don't care if they have a security liability in their pocket.
Of course you need to support your devices longer than 4 years. You need to support them as long as their design life, and if your design life is only 4 years then you're not aware of the trickle-down effect of hardware once bought.
However, if one sees Google as an OS vendor, then, considering that 60% of Android phones are running 4.2 or older (according to https://developer.android.com/about/dashboards/index.html), supporting somewhat older phones would seem to be desirable.
The fact remains is that many of those phones are unlikely to receive updates through 5.0.. How are you supposed to support them if the hardware vendors are unwilling to update them?