The company I currently work for does something similar. Latest version costs money, previous version gets given away with hardware, and version before that is free.

However, we are going to transition to latest version costs money and two feature set reduced versions gets given with hardware and free.

Having 3 versions to support is too much overhead for a small company. And giving away old versions of our products with issues that we know we've solved gives a bad image of our software to new users we are trying to up-sell to the latest version.

What's the rationale behind the current model?

From a business perspective, the older versions are used by older or larger companies that couldn't or didn't want to upgrade, they have money to shell out and should be charged more.

We don't have many corporate customers, mainly sell to individuals.

The idea is to grow the user base as large as possible and then sell them the latest version or other products.

Give away a version with 3rd party hardware is to grow the user base to new markets. Let somebody else handle the marketing / distribution and get their users. Sure lots people throw away the CD of bundled software when they buy something, but a decent number still install it.

Give away free is same idea. People love free stuff and will download it. Then hopefully they enjoy it and upgrade to get more features.

Ha they even included a clip art of L Ron Hubbard [1]?

I'm really curious who drew all of these pieces. 10k images is a ton of work...

[1] https://twitter.com/Clipart1994bot/status/107548368574555750...

I think these images were made by few artists, because the style is very distinct and recognizable. I still encounter these clipart pics on signs of crappy cafes and shops. Made of plotter-cut adhesive film, these pics look gorgeous.