Why don't server/support costs matter? Why does it have to be that it's more beneficial for these guys to have their software on 100k more devices than not? Why should all business models have to work that way? And why should someone who has a business model expecting to profit from Amazon's advertised 20% be willing to accept waiving that?
OP seems to have a valid complaint against Amazon and a worthwhile warning to others in similar situations, and you're just telling him to suck it up figure out some way around it. Okay, I get what you're saying, but withdrawing from what is by all evidence an unprofitable app market driven partially by a bait-and-switch still seems perfectly reasonable.