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The way I see it is that warranty pretty much just covers defects caused by the company to protect the consumer from buying a defective product. If I was to break something out of negligence, I wouldn't expect a company to cover the cost of replacing it. For example, I could buy a new car and crash it, I would not expect the dealership to fix it or give me a new one even though it is still under warranty.
But there is often that grey area about what is considered a manufacturing defect. All items purchased has some reasonable expectancy of durability that comes from normal use but the idea of what is a reasonable life expectacy for a product differs from person to person.
I would expect the sony reader to handle small drops onto a soft surface like carpet or a bed. But if I dropped it on a hard floor from a few feet high, I wouldn't feel too confident that instrument will continue to work. But that's just me though and like I said, everyone has their own opinion about how durable a product should be.
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