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It's not the "ergonomics" of the Kindle that are off. It's the "ugly." Not the same. Most people I've heard talk or write about the experiences actually USING the Kindle found that once they got used to it it was an incredibly comfortable way to read.
The Sony Reader on the other hand, while gorgeous, is not particular ergonomic. Pages are more a pain to turn, etc. I've had both.
Both are my takes, and others, of course. But I'd quality the Kindle's problems as "ergonomic."
"Barely competing" is also a bit ridiculous to say. It seems to be doing quite well. By itself it has done a lot to raise the awareness (and thus market, and thus longevity of the tech) of ebook and ebook readers. I'm not saying they were doing it for noble ends, but it has worked out that people are actually talking about such things (aside from rabid book and gadget fans.)
I've had three people ask me about the device this week, two of which not even knowing I had one.
Personally, I think it'd be in Amazon's best interest to be hardware agnostic. Sell things on every platform that is willing. But I can see Amazon not being willing to put up with the complications that selling multiple formats could cause - so we're likely going to be seeing mobi or some variation thereof (azw, tpz).
The DRM issue is... well... it's an issue for another day.
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