Is the free Kindle on the horizon?

Last month Amazon dropped the price of its iconic e-book reader, the Kindle, to $189 and began offering a Wi-Fi-only version of the device for $139. That led to immediate speculation among the tech press that prices would soon fall below $100; however, one executive in the machine-to-machine device space thinks that number is well short of the mark.

According to Dale Calder, CEO of Axeda, it won't be too long before the price point on a Kindle and other e-book readers reaches zero. The business model of Amazon and other e-book sellers lies in the service, not the hardware, and so they have every incentive to put their devices in customers' hands and get them buying books, Calder said. Such subsidies aren't unheard of. The free phone with contract has been a staple of the wireless industry for years. Amazon's business model is based on the transaction, though, not the subscription. An e-book reader customer could potentially be a voracious consumer, downloading hundreds of dollars in books and magazine subscriptions a month, or he or she could be a casual consumer plodding through a single novel over months. If Amazon can single out the former consumers, it has every reason to give them their hardware gratis, Calder said.