If amazon could release a wireless N device with color touch capable screen at the current kindle size it would suddenly be attracting people looking for a netbook (a small device for checking emails, browsing the web) as well as ebook readers. Suddenly the market for the kindle is about 50 times bigger.
I have a feeling that such a screen uses a lot of power though, and that is holding back it's development, maintaining small form factor and having enough battery life.
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