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This could mean considerable trouble for Sony. If Amazon delivers on the library lending, one of the significant differences between the Sony Reader and the Kindle will be gone. In fact, the Reader's library borrowing might become less valuable. If libraries are forced to choose between supporting the Kindle and supporting the Reader, the greater popularity of the Kindle might sway them to drop Reader support.
Of course, the touchscreen is still a differentiator, but it does make things look a little sketchier for the Reader.
I think the Nook Color is distinct enough from the Kindle that it won't really be threatened by this.
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