The device itself isn’t very different than the old Kindle. But it explains where Amazon sees itself expanding.

To Amazon, the 15 cents are almost pure profit. All the company needs to do is upload your file to a server, which the Kindle then pulls back down. The only cost for Amazon is running those servers, and they already have that infrastructure in place because of their cloud-computing business. So don't think of it as 15 cents; think of it as a nearly 100 percent profit margin.

Textbooks
The textbook industry is seriously inefficient. Students spend hundreds of dollars on books, use them for one semester, then sell them back for less than half the value. The costs are exorbitant because there are so few copies produced and the book is cycled out of curricula completely within a few years. This great chart from a college-bookstore association shows where all the money goes and also implies that 55.9 percent of textbook costs could be saved if they were delivered digitally, bypassing college bookstores. Amazon wants as much of that 55.9 percent as possible. That's a whole lot of profit for an industry estimated to be worth $8.6 billion.

To reap that reward, Amazon is betting it needs a bigger screen. And here, it's probably right. Textbooks are often heavy on equations, graphs, and charts. You need a big screen to display it all, and for that you need a Kindle DX. For students, too, the high price point is a nonissue. They already spend about $488 a year on books. If Amazon were smart, it would have added $1 to the DX's price to match the students' current outlay. Students appear to be the only demographic that the DX is actually well-suited to serve.

This business model, though, hinges on people actually choosing the $489 DX over the very similar $359 6-incher. Something tells me Bezos may be back in three months for another press conference. This time he'll be announcing a price cut.