I have been using an ereader for years now, and I like it very much. For me it is really as good as a paper book to read from, both in low light and strong daylight. Moreover, a real-world battery life of weeks means that I can forget about charging the reader until it tells me to.
All this is still very, very far from being possible for tablets. Their screens are somehow better now, but still unusable in strong daylight; while battery life is still pitifully short.
Conclusion: today, the "high-end" reading device is still very much the electrophoretic screen.
That said, in the last couple of years, progress on electronic ink screens has almost stopped. Today's screens are not better than those available two years ago, except that (I suppose, given the falling prices of ereaders) they are cheaper to manufacture.
I can see how this can be considered a sign of a decline if you look at it with the eyes we use for the PC/tablet/phone market. However, doing this is misleading. The simple truth is that current screens are very good at what we need them for: reading books. We don't really need them to get better. (Yes, availability of more robust and maybe larger screens would be welcome... but not crucial.)
I think of electrophoretic displays as a mature technology.
On the other side, given the continuously increasing demands on computing power, connectivity and so on, the companies producing tablets need continuous innovation just to stay afloat. This is a sign that such product category is immature, not that electronic ink is going to die soon. Analysts are not saying that the bycicle is a "transitional technology" just because the basic design and components are decades old...
I can see why E Ink is looking for alternative applications for their products: the ereader market is not going to grow substantially, and the customers for screens are too few and too strong (Amazon in primis).