Originally Posted by geekmaster

They flip the switch in your account, tied to your serial number. For the existing eink kindles (when ordered as a "gift" so they are not registered), they ship as non-SO, and start displaying ads shortly after you register them.

You can also test that with a FULL "factory reset" (back to new-in-box condition), by erasing the persistent user store (not USB drive) partition, where all your settings are stored.

The shipping of non-SO models first is (probably) just a non-technical policy decision. Perhaps to start generating SO ad revenue early in the shipping schedule?