It wasn't one of the companies or their representatives that said it though, but Richard Shim, an analyst at NPD DisplaySearch.
Nevertheless, since he managed to get the information from the “supply chain”, it is reasonable to assume that the product will become more than an idea.
We are guessing that Google is considering a 7-inch design with a low-cost ARM CPU of some sort, and maybe 8 GB or 4 GB storage. Anything more wouldn't fit the sum, especially if HD video playback support is to be part of the feature set.
We will have to bide our time until a more informative leak emerges.