[ineedasername]

It's possible they don't see much elasticity in the market, e.g. that a 50% decrease in cost would net them >= 50% increase in sales.

In the very short term they're probably right, but I think they'd be wrong in the long term: once the price drops it might take time but I think people would come up with a variety of novel products and use cases. Amazon for example has made a big bet on digital comics w/comixology. I'm sure they'd love to offer an affordable color comic reader. Or cheap 8.5x11 tablets could become the default note taking devices for a lot of students, especially for many STEM classes.