Isn't that true of anything? "Why would people trust Amazon to run their data center?" "Why would people wait for books to be shipped when they could just go to the bookstore?"

Fact is, everything new and different is new and different at first. But that fades away quite quickly.

Sorry, I think the way I backed into my point has confused you. I'm not saying, "Amazon's store is new and different. Why would people use it?" What I mean to say is: "I don't have any reason to believe many people are currently using Amazon's store. It seems unlikely. Since (as far as we can tell) this store is currently not successful, and its lack of success is quite possibly due to factors other than price, its pricing doesn't reveal much about what people are willing to pay." And that is not true of everything.

The difficulty is definitely an issue currently. But Amazon have shown willingness to get involved in the hardware market.

An Amazon (or Kindle?) branded Android tablet with the Amazon store and music locker service is starting to be more and more likely.

That still doesn't mean their current pricing strategy will turn out to be successful.