I think rising consumer expectations soak up a lot of that -- you could make the main board and other components a third the price if you're satisfied with mid-2000s specs e.g. 200MB storage, slow page turns, bundled radios, no touchscreen, no PDF support, etc.
At some point the raw materials cost (which generally aren't getting much cheaper) becomes a major factor and that's harder to cut without a new approach.
Eink screen aside, it may be that we're just nearing the limits with current manufacturing approaches and that the next leap requires a wildly different approach.
Most of the rest of your calculations mostly make sense.
BOM for a color eink about 35$ all together for a mass produced quantity of one, delivered anywhere (until tariffs).
Assumed quantity of customers, millions? Its so cheap that governments could give it out to schools, one eink ebook per child, cheaper than one year's worth of school books anyway.
If it's that simple, what's your theory as to why that's not more common?
I definitely agree that selling hardware at cost (or at a loss) in the hopes of turning a profit off of content sales is an extremely risky strategy. Many companies try that approach, few succeed.
But if you price it like a typical consumer product and sell it for ~1.5 * BOM (i.e. ~$50 retail price on $35 BOM) then you don't need anyone to buy books because you can survive off the profit from the hardware alone. And because I believe that a $50 ereader would sell well, I don't know why they are not more common if it really is possible to build and assemble a mass-market ereader with a $35 BOM as the prior poster claimed.
I'm curious how much you think an e-reader should cost?
Let's say the BOM for a bargain-bin e-reader is ~$65: e-ink display (~$25), mainboard (~$15), touchscreen and/or buttons (~$7), radios (~$3), battery (~$3), case (~$3), assembly (~$6), packaging (~$3). Forget about a charging cable. Then you've got to iron out the drivers and software, provide support, handle returns (which will be higher if you cheap out on materials) and turn a profit (assuming you're not Amazon). Let's say you charge ~1.5x BOM, now your product is ~$98.
Maybe you "borrow" your software and hardware designs from a competitor. Maybe you're willing to continuously change your company name so you can purchase low-quality parts without having to accept returns. Maybe you ask suppliers for a discount because you just know you're going to have enormous economies of scale and you're somehow more convincing than every other company (that isn't Amazon) asking for the same discount.
You do all of the above so you can sell your new e-reader for the insanely low price of $80. Will you move enough units for all that to be worth it? Are there really that many customers who would buy your $80 no-name e-reader instead of a second-hand Kindle?