As you can see at right, Amazon is also offering to let me see ads on my K4. I find that moderately amusing considering that this is the Kindle that I paid Amazon $30 to get rid of the ads.
While all current Kindle models can show ads, you'll first need to install the latest firmware update for the K3. Now, I'm showing you the option menu for the K4 because my K3 still has not been updated. It's outside my reach at the moment so I haven't had the chance. (It's technically my mother's Kindle but it's still on my account.)
Amazon launched their first ad-subsidized Kindle in May 2011. It was a Wifi only model, and it was followed a short while later by a 3G model. They both had the same hardware as the standard K3, but they also came with ads that were displayed both while the K3 was asleep and at the bottom of the home screen. And when the Kindle Fire and the 3 new Kindles launched in late September, the ad-subsidized price was available for all Kindles. In fact, Amazon made it the center point of their marketing campaign.
That may have turned out to be something of a tactical error, because it gave B&N and Sony the opportunity to pitch their ereaders as not having annoying ads. That was even one of the Nook Touch's selling points at the Nook Tablet launch event a couple weeks back.
Of course, the snipe about ads is funny when coming from B&N; they have ads on the Nook Touch. If you have a Nook Touch running the latest firmware, look at the recommended ebooks shown at the bottom of the home screen. It's a subtle trick on the part of B&N, but those are still ads.
BTW, this has been discussed on Twitter for a couple weeks now and we've decided that there's a good chance that B&N put those recommended ebooks on the home screen for a reason. I strongly suspect that they are reserving the space for their own ad program, and that they launched with ebooks as a way to get everyone used to it before the real ads come.
You might want the ads, but I object. As a matter of principle, I don't appreciate B&N adding ads to a device where I didn't request them and I don't have the option of declining them. There's something fundamentally wrong with any platform where this happens, and the same goes for the company.
If B&N follows through on the ads, then they will be demonstrating the casual disregard for the user that we expect from Amazon. It would be a serious misstep for B&N; they don't have the same reputation - yet.