I think they've got a few problems with this approach, but it depends on what new machines they bring out over the next few months.
I'm going to concentrate on what I expect the average consumer will think, not what we here think about closed vs open formats, etc.
At the moment (prior to any new Sony releases):
The availability of a 6" reader with wifi from Amazon at £109 is likely to dent their ability to sell the 5" PRS-300 at £124. Particularly as the Kindle has 4GB of storage and the PRS-300 has 512MB.
With the arrival of Amazon's UK eBook store the other UK offerings are going to get blown away by the number of available titles. Waterstone's is great, it's got less than 30,000 eBook titles, including the free ones. Amazon are going to launch with 400,000 excluding free titles. Sony are going to get a lot of confused customers saying "What do you mean I can't buy books from Amazon?"
Sony have a gap in their range for a non-touch screen 6" device. I spent a short time in the stores comparing the Touch with the 300 and the Elonex 511EB and it was clear that the non-touch screen devices were more legible. Not everyone will spot that but plenty will.
I was going to compare the Daily edition with the iPad and forthcoming Android tablets, but I can't find anyone selling it anymore. It's not even featured in the Sony Reader range on the UK Sony site. Did I miss that being discontinued?