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I think there will always be a place for dedicated devices. One of the factors in favor of this is that many different types of devices have requirements that contradict each other.
With both ebook readers and video/picture viewers, users want a large screen. However, cell phone users and digital audio player (DAP) users want a small device, which doesn't allow for a large screen. As a personal example, my DAP can play videos but the small screen (about 2 inches/5.1 cm diagonal) makes watching videos on it an unenjoyable experience.
One of the factors in favor of e-ink ebook readers is the long battery life. With my reader, I can go for a few days of regular use on a single charge. Even with the heaviest use I've rarely had to charge more than every other day.
Another factor in favor of dedicated devices is a better interface. My experience has been that when you have a device that is designed to do many different uses, the interface tends to suffer due to the need to accomdate many different functions.
Although my PDA can function as an audio player, the interface is not as good as the one in my DAP (which, although it can play videos and show pictures, focuses on playing audio). In the same way, my ebook inferface is designed around the idea of reading and it works well for that function.
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