They are thinking that they are making a somewhat cheaper device for people who don't have the capacity to lose respect for a corporation over a lack of ad-targeting.
You say that as if it were some kind of moral failing. I bought the version with ads not because I want to be specially targeted by ads, but because it was cheaper and the ads are not intrusive and don't bother me. I use my Kindle to read books, not to get shopping tips. The only reason an ad would annoy me is if it intruded on my attention while I'm reading my book. They can try to sell me pink panties while it's off for all I care. If they're not targeting correctly, that's their problem, and it is no skin off my nose.
