Amazon should not be trying to make money on selling the Kindle – the play is not the same as Apple's iTunes Store. Amazon wants to make the e-book distribution model their profit center – as such they need to get Kindles into widespread use. While everyone may not buy as many books as the current early(ish) adopters many certainly would. I think, that the iTunes store proves that most people will buy their media if it is convenient to do so.

In some ways, I think what's going on right now is that Amazon is looking at everything so far as a big beta for usage patterns – in particular as to how the 3G usage will go. Before they try and make a power play on the device they want to make sure they aren't going to take a bath on chargebacks to Sprint. Hence their newly rolled out 3G charges.

I also completely agree about your (rob's) view on additive subsidies in your comment below. It makes sense and is something the periodical world is somewhat used to in terms of offering big benefits for subscriptions.I have a blog post brewing here, need to gel some more thoughts. :)

Ipods are NOT subsidized, iPhones are, for example, because one has lock in and one does not.

you want a kindle?

sign a 2 year contract to subscribe to periodical X and you get $Y off. Buy a $100 kindle credit and you will get $50 off, etc. Meaning that if you sub to NYT, WSJ, WaPo, some blogs, harpers (please put harpers on the kindle. please?!) etc you can get initial cost closer to $0, but will pay $50 a month for all your contracted subscriptions for some period of time.

colleges will require purchase of kindle DXs. They will require textbook purchase via kindleDX and get heavy cut of cost. You will no longer be able to bittorrent textbooks. Since kindles have email addresses teachers will be able to mail docs to kindles, colleges will get a referral cut to all other books students buy on KindleDXs.

It is all a set of actions counteracting textbook piracy and ensuring that someone will have to pay $300 for the algorithms book that they will leverage to crack the kindle's DRM system, though, so it is not all bad.

Also not all bad will be ubiquitous availability of what would be 40lbs of textbooks everywhere.

Bad will be that these texts will have shit-poor dogearing, post it note attaching and margin writing potential…. which is probably not used anyway anymore because people want the $16 that the bookstore will give them for their $300 algorithm textbooks.

Why wouldn't Amazon cut the price even in HALF on these and get the devices into more hands. Hands that would, in turn, go out and purchase kindle books from Amazon.

I just dont get it.