The profit margin on Keurig machines is very low and sometimes even negative. On the other hand, the K-cup coffee pods have much higher profit margins. The business model: sell one item at break-even or for free to increase the sales of the complementary good. This is the “razor and blades” model. (Despite being named after the safety razor industry, early companies like Gillette didn’t initially follow this model).
Another way to put this is "loss leader", right?