Pure speculation, but interesting. There’s a link to another post that talks about a possible Amazon strategy to give all Prime members a free Kindle.
When I brought it to the attention of publishing veterans they would often laugh nervously. How outrageous! they would say. It must cost something to make? The trick was figuring out how Amazon could bundle the free Kindle and still make money. My thought was the cell phone model: a free Kindle if you buy X number of e-books.
Link to the rest at The Technium