Wow, a lot of good posts here.
I agree with Cthulhu that Li-Ion is nearing the end of its innovation stage, so that 3-4 year battery life is what I'd expect.
I was waiting for someone to make the iPod comparison (thanks, Leaping Gnome), and was surprised it took so long. I think the Sony marketers (and many others) have been comparing, consciously or unconsciously, the prospects of the Reader to the iPod. The Reader has a similar price point to the original iPod, both use a non-replaceable lithium-ion battery, both are designed to be media players (not media editors), so both have a feature set of similar complexity. It looks like Sony is hoping for the same success.
As for lifespan, I think it will mimic iPods, so a five year life is reasonable. Here's why:
1. Batteries. The original battery will have a lifespan of a few years, but from the Reader internal pics posted in another post, the battery is plugged in, not soldered in, so it's replaceable. The Reader is designed to be serviced (screws, not plastic clips), so I think battery replacement service is expected but not easy, like changing the timing belt on a car. For your Reader to have a long life, expect to replace the battery a few times. With three years per battery, a ten-year lifespan is reasonable. (After that, the question becomes: "Do they make my battery any more?")
2. Case. Scotty1024 complained about the flakiness of the case on his Librie, and Sony has replaced that with a metal case, so they seem to have learned from that design flaw. The metal case is more rugged than a plastic one. It might get scratched, but scratches don't affect performance.
3. Temperature Stress. Temperature stresses are another way things wear out, and I haven't had (nor read) any complaints about the Reader heating up or overheating, so death by temperature stress seems unlikely.
4. Display. The biggest unknown is the E-ink display. From reading E-Ink's documentation on their website, the production process similar to (and simpler than) making active-matrix LCDs. I also remember mention of a segmented display at E-ink's offices running continuously for over 3 years. That bodes well for the lifespan of the screen.
5. Buttons. On any product, the moving parts tend to wear out first, unless they're designed to be sturdier. I have a TV remote that is 5-10 years old; the printing on the Mute button has partially worn off, but it still works fine. Unless Sony has skimped, the buttons should last.
6. Joystick Button. That little up/down/left/right/ENT thing, which I'm calling the joystick button, could wear out sooner because of it's complexity (compared to standard buttons), and I haven't seen it used in many (any?) other devices, so its lifespan is an unknown to me. I would expect it to be somewhat shorter than standard buttons, but I really don't know.
Since all of these points factor similarly into the lifespan of an iPod, I conclude it will have a similar durability.
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