It is interesting that Amazon calculate $25 to the the ARPU they can achieve from the advertising generated over the life of the device, yet for most people I've asked $25 doesn't seem to be enough of an incentive/saving.

Not sure what conclusion to draw from that.

To be honest, I've never liked the screensavers on my Kindle (probably makes me uncultured, but I read programming books almost exclusively.) Always wondered why I couldn't change it easily - guess this is the reason. $25 isn't a great deal of a saving, 30-40 seems like a better saving, but I'd still choose it, I'd actually prefer to see advertising which may interest me on the main screen, especially if it uses Amazons recommendation engine to show me books that I would like.

I guess the main advantage of this is that Amazon can say things like "starting from $114!" even though many people will choose the ad-free upgrade. I'd also imagine that down the track they'll move it down to $99 ad-supported, which would be great for marketing.

I don't know if I'd be interested in cultivating customers who are that price sensitive, especially with so many publishers insistent on the 12.99 price point for new Kindle books. Seems like a weird move for Amazon.

Given the $10-13 price point for most Kindle books, I'm honestly surprised Amazon isn't giving the device away to customers who already spend more than $100 / year and don't have one.

Oh, they will. Wasn't there a projection about this here recently?

Unless you can force folks to buy a minimum number of books, giving it away for free would just be too ripe for abuse. Giving it away at slightly below cost would make sense (and they might already be doing that, essentially.)

Something like a free kindle to all new Prime subscribers?

Won't buy one until they have full color displays. While I understand that the battery life of the e-ink is far and away superior to any color display, every time I see a Kindle, (or any e-ink display) I can't help but see the old dot-matrix gameboys. Having read books on my iPad, I don't think I can go back to monochromatic displays, regardless of price or battery life advantages they offer.

I'll be happy to pay the extra $25 for the regular version. The ad block included works just perfect ;-)

I absolutely agree. Although the comments on engadget suggest buying the cheap version and reflashing it with vanilla firmware which could be a nice thing to do.