This is all about the app store. Remember Microsoft can make a good chunk of profit from each app purchase and nobody will be developing let alone buying apps if Microsoft cannot get eyes on it.
[1] http://www.businessinsider.com/chart-of-the-day-apple-revenu...
How are Microsoft (and Amazon, whose entire $199 Kindle Fire pricing) going to make money in this market?
No doubt they want folks on the store, but I question whether this is the reason behind the $40 upgrade pricing.