I only found out about the iliad this evening from a post in the engadget article on the Sony Reader. This is how I see the situation.
Positives:
Iliad, larger screen with many other features not available on the sony. Highly desirable. Wide variety of supported formats. Touch screen input. Wired and wireless networking.
Sony Reader, More compact for easy transportation. Focused design no frivolous extras ( excluding mp3 playback ). They have a content provision system to back up the device. Supports SD card so even if Mac support is lacking you can get files onto the device. Supports conversion of a number of formats into sonys BBeb thing.
Negatives :
iliad, left to fend for yourself on the content front. No mention of what DRM methods are supported, possibly restricting you to either classic content or the shadier methods of acquisition. reduced battery life due to the extras like wifi, usb host etc. Larger screen makes for a less portable device.
Reader, it's a Sony product. Not likely to support OSX. Less support for various formats, natively.
Tough choice, but given that they come out at roughly the same time (supposedly) at least there is the chance for real world comparisons before shelling out the cash.
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