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I don't think Sony would drop the Reader this early in the game either, especially considering this is gen 2 following the Librie. As was pointed out earlier, embracing a more formal/universal format isn't such a bad thing considering it will result in wider adoption and grreater acceptance. Pointing to the Tiger Direct special, I think, as was pointed out, this was a 4th of July special and may have also been a way to gauge how responsive people would be to that price figure. While Sony probably spent a mint in developing the Reader, the actual costs for parts drops over time, so manufacturing costs drop and we may (read eventually) see price decreases in the consumer market. When the PSP came out it was $250, a while later it dropped to $199, and now it's at $169; the same can be said for the PS2, so we can see that Sony likes phased price changes.
I don't think the Reader is a goner for several reasons; a few are a) it's out there and you can put pretty much whatever you like on it without the Connect store, and b) it's flash-upgradable; meaning that when Sony wants to support a new format, after a bit 'o tinkering, a new update will come out and voila!
I'm happy with what I've got and I'm always the optimist, so we will see where the Reader takes us.
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