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Rumor: Free Kindles to Amazon Prime customers?

TechCrunch claims it has it on good authority that Amazon is looking into giving away Kindle e-readers to customers who subscribe to its $79 Prime service for fast, free shipping.

At what price can Amazon afford to give away free Kindles?

Some banks have given away iPods to new customers for opening checking accounts. So what's so far-fetched about Amazon trying to entice its customers into subscribing to its $79-per-year Amazon Prime service with a free Kindle?

Nothing, according to TechCrunch, which says a reliable source said, "Amazon wants to give a free Kindle to every Amazon Prime subscriber." However, the only problem is that Amazon has to figure out how to do it without losing money.

In case you don't know, Amazon's Prime service allows you to get free two-day shipping on any product in Amazon's catalog that's tagged with a Prime logo (or on virtually any item Amazon offers free shipping). If you shop a lot at Amazon, it's definitely a nice option, and a lot of people think it's a great deal (disclosure: I'm a Prime customer). That said, plenty of people just don't feel they shop at Amazon quite enough to justify a $79 expenditure. The idea would be to convert all those folks into Prime subscribers--and Kindle users.

Some publications have noted the post sounds pretty dubious--and it may be--but Amazon has proven that it's willing to lose money on e-books (in pricing best sellers and many new releases at $9.99, it loses around $2 per e-book) to attract customers to the Kindle platform. And since the e-book market very much lends itself to a razor/razor blade model, it makes sense that at some point the hardware for reading e-books will cost very little or even be free.

How long it will take to get to that point is debatable, but if you consider that certain entry-level Netbooks sell for $199 in clearance sales, there's no reason a chintzy little monochrome e-reader should cost all that much to make. Of course, you'd have to strip out some features, like the "free" wireless 3G, and maybe shrink the screen to 5 inches to really get the price down. But a sub-$100 Kindle could happen sooner than we think--if Amazon wants to make it happen.

What do you guys think? Would you subscribe to Amazon Prime for a free Kindle, even if, say, you had to ante up for two or three years? And would you only do it for a current Kindle ($259) and not some stripped-down model?