Assuming it's that simple, do you have an alternate theory as to why e-readers in this range are not more common?
I definitely agree that selling hardware at cost (or at a loss) in the hopes of turning a profit off of content sales is an extremely risky strategy. Many companies try that approach, few succeed.
But if you price it like a typical consumer product and sell it for ~1.5 * BOM (i.e. ~$50 retail price on $35 BOM) then you don't need anyone to buy books because you can survive off the profit from the hardware alone. And because I believe that a $50 ereader would sell well, I don't know why they are not more common if it really is possible to build and assemble a mass-market ereader with a $35 BOM as the prior poster claimed.