Amazon Kindle hardware + service costs - who subsidizes them?

Difference in cost between WiFi-only and 3G Kindle = $50.
Lifetime cellular service = "free"
Hardware cost of cell modem = ?
Additional tech support cost of 3G = ?

So, there is <$50 to pay for an individual's lifetime of "free 3G wireless" service.  What is that wholesale cost?  Is it fully covered by <$50?

Or, is it pooled, where some are being over-charged, some (heavy users) are under-charged?

Or, is some of the cost borne by Kindle book purchases?

Amazon doesn't make it clear, and I don't like the idea of buying a book that's subsidizing somebody's reader.  If they buy a reader with cell service, they should pay for it.  Not me, who is using my own computer or smartphone...and paying for my own WiFi and cellular access.

Anyone with knowledge of the cost breakdowns?

I did read that Amazon started charging $0.10/upload, then changed it to $0.15/MB uploaded for documents that aren't Kindle purchases.  Things like personal spreadsheets, PDF files, etc.

So, this isn't a benevolent "free" service like they market it.  It's there as a medium for buying Kindle books.

Who is paying, and how much?
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Rich WeisslerProfessional Troublemaker^h^h^h^h^hshooterCommented:
Yes, handling of those 'personal files' on the 'free 3G' is discussed here:

Those $0.15/MB charges are three times the rate US Wireless charges per MB for data... so I'd say that is probably revenue generating for Amazon, even after they give the 3G Network providers their cut.  (And unfortunately I don't have inside information on what Amazon's contracts with 3G carriers looks like, but I'd be surprised if the carriers are getting much more than a few cents per MB they carry to Kindles, and no per-device fee.)  Kindles aren't a heavy network usage device, and unlike most other traffic, and by it's very nature -- can handle data loss/retransmission very well.

I'd estimate, therefore, that $0.001 to 0.100 of the purchase price of anything you get from Amazon is probably sent over to pay for the transmission, if you happen to use Whispernet... and if you connect via Wi-Fi, it's just money in their pocket.  (Although they probably don't even bother thinking in those terms.  At that point, the cost of Whispernet is noise, and just absorbed into the cost of doing business in the emerging ebook market.)  They are making money on even your personal data uploads.  They are probably also assuming all the 3G books bought in 2010-11 will be retired by 2013, and everyone will have to purchase the fourth or fifth generation to take advantage of whatever wireless network is in vogue by then, so they got your $50 for the 'free 3G' service, and the ~$130 for the ebook itself.

Believe me, every Kindle user is paying, none are really getting a free ride.  (Even as the proud owner of a 3G Kindle who has been reading privately obtained PDFs, and Project Gutenberg books and transferring them with WiFi -- I'll never been able to use it enough that Amazon won't still make a profit on me.)

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aleghartAuthor Commented:
Thanks for the response.
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