I don't know whether eReader is in trouble. But I suspect that any person and any store who relies heavily on DRM-locked Mobipocket is in trouble. Amazon is in the singular position of owning and licensing the DRM used by a considerable number of its e-book competitors. Not releasing an iPhone app that can read competitors' books may only be the first step.
http://www.teleread.org/2009/03/04/d...t-on-the-wall/