I think the form of the device is irrelevant. It's even irrelevant if Sony manages to bring out a new device with similar connectivity like the Kindle.
Key to success is the store. Why do you think Apple has put so much focus on their iTunes stores? App Store has already been responsible for 60 million downloads! This is where the big money comes from, not from the selling of hardware.
To succeed, Sony would have to come up with a one stop shop that even tops Amazon - something, given Amazon's long history and experience in online book retailing, I find impossible to do. Hence Sony's days in the e-book biz are numbered... unless, perhaps, if they concentrated on the hardware and became exclusive hardware supplier to Amazon, they could still stand a chance...
