I never said the Kindle should be free. I see no issue with paying for it, and I even pay extra for the ones without ads. This is because, as I said, I do not personally want to pay for a product that also contains advertisements.

What Amazon did was say the following: "You can buy our hardware, and deal with the ads. You can pay us even more money to get a better experience."

That is a bad message for subsidised hardware. The real cost is hidden behind a 'pay us more money for a better experience'.

Instead, what they should have done was say the following: "Our hardware costs $X, but you can get it even cheaper if you agree to minimally intrusive advertisements!" And on this route, you can also offer the option to 'buy' off advertisements as well. Make this part easy. Don't piss off the user.

They should have turned that negative into a positive. Make it the users choice to opt in to ads.