This little announcement is getting lost amidst all the furor over the Nook and other Kindle killers/wannabees/rivals, etc.
IMHO this move on Amazon's part signals the target audience for present & future Kindle sales & growth. Rather than compete with the "gotta have the new gadget b/c it's new" or "I'll buy anything from Apple" or "I'll buy the first reader with color" Amazon is solidly targeting readers who just want to read - not email, not phone, not surf. And now - readers with eye problems, and older readers. In other words, the baby boomers who are approaching/entering retirement age & who have the income to spend on readers & books - and who are less comfortable with using PCs than their children/grandchildren. On other boards I've seen discussions as to a collaboration between Amazon & AARP, similar to that of mobile phone companies that offer phones with LARGE displays & buttons that do ONE thing - make phone calls.
The result: this demographic (retirement & near-retirement age) is a fast growing segment of population. If Amazon can sell Kindles that work reliably out of the box, don't require a computer, and have that oh-so-easy one click purchasing of books, how can they lose? This is the market for a device that does only one thing - let you read books. This is the device that folks can give parents, grandparents, etc that they won't be constantly bugged to come over & fix. Load it up once a year at Xmas, birthdays, etc. and everyone wins.
This population also doesn't care about DRM (and obviously from recent news stories) has no idea what DRM is. If Amazon can deliver books automatically to a reader, they've got the market.
So, in answer to all the doom-sayers that predict a device that does only one thing has no future - Amazon is identifying a market for just such a device. For someone who loves to read and has been prevented by age or medical problems from reading pbooks, Kindle (whatever its pricing strategy) will be more than welcome.