Giving E-ink Corporation most of the profit via that 25$ screen is too much risk to make back on users who actually sign up to your store and buy books vs ones that put the gift in the closet, clearance models, losing to a more popular store, etc.
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.