via wired.com
Jeff Bezos is a trailblazer of the first order. In this Wired article he explains why the Kindle breaks from the traditional business models of subsidized hardware (e.g. cell phones for 99 cents)
It makes so much sense for Kindle. People are willing to pay more up front if it means no hidden fees later (no monthly fees for the connected Whispernet service, and no additional markup on each book). We are opened up to the unlimited nature of this sliver of a device -- imagine, every book at our disposal for cheaper than we'd pay for the treekilling one!
The alternative sucks. Yeah the device is free, but I gotta pay for connectivity and even more for books? Yechhh.
It's emotional marketing at its best.