I don't know for sure whether or not dedicated readers will survive or not; however, there is one device that died to a more generalized device, the PDA. Now granted, the PDA was a more general purpose device but dedicated PDA's were more capable than their smart phone counterparts when the majority disapeared. The last time I checked (at least 6 months ago) the only dedicated PDA still bing sold was by HP (unless you want to count the iPod touch). I do not know if they are still selling them. There are 2 primary reasons why MP3 players still exist at this point: price and size. If ereaders can maintain staying at least 50% less expensive than tablets that can last at least a full day of use on a charge then they may be able to maintain enough of a price advantage. Currently, e-ink is the other advantage that dedicated readers have but if Pixel Qi or some similar technology becomes mainstream then they will basically lose that advantage.
There are only 2 ways you can maintain the price advantage: volume of sales and selling at or near cost to promote the same company selling ebooks. If the ereader losses its display advantage (or even nearly looses it since even if ereaders have a slightly better display anything close will be good enough for most people, even many people who read for hours a day every day) then it will lose volume of sales and it will be more difficult to maintain enough of a price advantage since cost of manufacturing goes up per unit with lower volume.
Fore anyone looking at pixels per inch, Apple already has the potential to blow e-ink out of the watter with their new display, they just have to scale up the display (and yes, I am aware of the issues on yealds with LCD screens as displays get larger. I am only pointing out that the potential is there) the only issue is that it is back lit for those that have issues with that.
If the ereaders can maintain both price and display advantages then they have a future. If they cannot maintain both they are doomed because, even though some people will still want them the market will be to small. If you are lucky, at that point 1 or 2 companies will find a way to make money in the ereader market and they will not disappear completely, but your options will be severly limited.
Just my 2 cents worth.
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