Let me start by saying that I agree with you on one thing: $359 is a lot of money. I just don't agree that it's too much to pay for an Amazon Kindle 2.
In the wake of the announcement of the Kindle 2, the general response is that it's nice and all, but the price is just too high. A price breakdown of the original device found that you'd need to buy about 60 books to make up the price difference (all while paying to get delivery of newspapers and periodicals you could read online for free). And analysts complain that Kindle is a niche product with a small, upwardly mobile target audience. And here's my question: what is the problem with that?
Isn't the Kindle, fundamentally, an early adopter's device? And aren't we usually pretty tolerant of that in the tech space? You all know this story. In the evolution of technology, devices start expensive, they target a niche audience that can afford the price and care passionately about the product, and then they either adopt more mainstream features or become mainstream through a combination of obvious value proposition and gradually lower prices.
Even though the Kindle is on its second iteration, it's still very much in early-adopter territory. Does anyone really expect that an e-book reader is going to take the entire world by storm and become the iPod-like gadget commodity of its day? Of course not; so why should it be priced like bread and milk?
Then there are the features. Amazon's wireless Whispernet, which lets you download books from anywhere you can get an EVDO connection, is a feature that, if you bought it from Sprint, would cost you $60 a month and require a two-year contract that you'd have to pay $200 to terminate early. If you bought a "subsidized" Kindle, a la the Radio Shack Netbook from Acer, you'd end up paying almost $1,800 for the thing. Sure, you don't get all the features from Whispernet that you get from a full-fledged EVDO data plan, but you're also not paying for it.
As for the idea that Amazon should subsidize the device because it makes money off the books: I think it's bogus. Amazon doesn't make the books; it only profits from their sales. And even though the Kindle is laden with DRM that makes it difficult to load it up with non-Amazon content, it's not impossible to put other files on it. Buying a Kindle in no way guarantees Amazon book-related income, just like buying an iPod in no way guarantees Apple music-related income.
Sure, it's likely to happen, but you don't see people asking Apple to subsidize the cost of the $399 32GB iPod Touch just because you'll probably buy music, movies, and TV shows from the iTunes Store.
I'm not going to argue that the Kindle is any kind of a bargain. It's an expensive device that performs limited functions. If you're not passionate about its value proposition--reading books, magazines, newspapers, and other documents on the go and buying new content anytime the impulse arises, saving space, and helping out the environment by easing demand for paper--it's easy to decide not to buy the Kindle. That's the very definition of a luxury device, or at least an elective gadget.
On the other hand, almost anyone would covet an iPod Touch, but few can afford it. Kick up a fuss about that! The Kindle 2 is a niche device, and it shouldn't have to apologize for that fact. It doesn't have to apologize to me. I'm an early adopter (of second-generation hardware), I read almost constantly (I'll buy 60 books within a year or two, max), and I've been saving up. I preordered mine today!