Contributed by B@rt.
Blender is free because NaN doesn't believe in selling tools; in a marketing model that excludes and limits people to express their creativity. By supporting a large group of creatives, Blender is becoming a widely accepted standard for (interactive) 3D creation and playback.
Since computing is moving to the living room (set top box, PS2, ...) and the pocket (mobiles, PDA), NaN aims to create revenues in the B2B market segment, for example by bundling deals with PC/hardware manufacturors or licensing deals for closed platforms such as PS2, X-Box and mobiles.