[jo909]

Not a 99 dollar retail price device. I'd guess the hardware earned the developer maybe 10, 20 bucks?

Loosing one or two less future sale probably makes up for the loss.

Understanding that one customers frustration and improving the experience for other new future customers could literally be priceless.

[problems]

They're probably making way more than $10-20 on that thing - you can buy wifi capable dev boards for $10 out of China. If you're producing in bulk, you can probably build that even cheaper.

The marginal cost to make more units is dirt cheap, I'd be surprised if it's >$20 - the cost to develop the whole system in the first place is the hard part on the technical side of things. Then there's the business side which they just blew pretty bad. Giving the customer the hardware costs them almost nothing - write it off to make the customer happy. As long as you don't have to do that too much, it's perfectly sustainable.

[xanderstrike]

If the company only makes $20 bucks on it, then they're losing $80 by giving it away. That's how profit margins work.