I just came across this interesting article:
http://bigthink.com/ideas/20880
...
Amazon probably couldn’t have afforded to pursue a penetration pricing strategy long term, especially since they have no idea how long it will take to make electronic book readers ubiquitous. But this $99 threshold is pretty powerful. I never even considered owning an IPhone until recently, when—you guessed it, Wal-Mart started offering the discontinued model for $99.
Show me a $99 Kindle, Mr. Bezos, and you'll get me and a few million more customers to reach for our wallets.