I agree that DRM and incompatable formats and ease of purchase are all problems, but I don't think they're the biggest problem.
Most people don't like reading from a computer screen. They cite discomfort sitting at a desk, or the heat of a laptop, or the glare of a screen, or the size of a PDA screen, or the short battery-life of all of these devices. "Fine," I can hear you say, "we have beautiful portable e ink devices with a great form-factor for reading and long-lasting batteries now." However, most people also won't pay $100+ for a device that only reads books. It takes a dedicated reader (like those who frequent this site) to be willing to drop that much cash for a device with only one function.
Until the usability of book-sized devices expands to be able to perform other functions and the batteries last all day without any special effort on the user's part, while the devices themselves stay at or below current low-end desktop system prices, I don't think ebooks will really take off. UMPCs are a step in the right direction, but the batteries don't last long enough and the screens are still uncomfortable for many people.
When we have a reasonably priced device that's about the size and weight of a trade paperback, with a reflective (probably front-lit) color screen that can handle full-motion video framerates and runs organizational software and a full-strength browser (even if it provides no other native software, people will be able to get what they want from Google Apps and similar), and a long-lasting battery, we'll probably see mass-market ebooks, and I'm willing to bet the format and DRM issues (and probably the price and availability issues) will be solved at the same time. At that point the market pressures will force a frictionless online retail experience to be developed and provided.
But as I've said elsewhere, I think it could happen immediately if either Apple or Nintendo were to jump into the ebook market, despite the shortcomings of the screens of their devices, simply because so many people have them. It would take a marketing push to promote ebooks targeted at the demographic that buys iPods and Nintendo DS units today, though. I think they missed a good bet by letting the Harry Potter books go by. The next contender might be the final book in the Eragon series.
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