I've been avidly following the e-reader news, both the pre-holiday news about the Barnes and Noble Nook and Sony's new model, and the news from CES of bunches of readers, each with some slick feature.
There's a great article about the whole thing (describing both the situation and all those new e-readers) at Forbes.
I've been using a Kindle since the week of the original announcement (about two years ago now) and I don't go anywhere without one. I have read hundreds of books on my Kindles (I've gone through a few) and although I recognize its shortcomings it has three important (and unbeatable) features: market share, content, and user familiarity. Before the Kindle came along I tried dozens of computer reading schemes, from the fancy books Apple had made for the Macintosh (I still have them around somewhere) to all kinds of weird devices that suffered from a high price and a lack of content.
What makes the Kindle so alluring isn't its small size (and certainly not its battery life), but the fact that as I read the New York Times book review I can sit with my Kindle next to me and order another pile of brand new books.
All this completely unnecessary differentiation reminds me of 1982 when every electronics vendor you don't remember was fielding a "better" PC (better than IBM's). I ran a tidy business where the vendors sent us their PC's and wanted us to tell them how successful they were going to be. My standard letter always said "You can't succeed in this industry being almost compatible with the IBM PC and somehow thinking that some feature makes you better. It won't work." It wouldn't work because every software vendor wasn't going to make a different version for every slightly different PC.
What I want is for everyone to agree on a single format (or make the format invisible to me since I don't care unless I'm a publisher) so I can move books from one place to another. I'm already enjoying the fact that I can read my Kindle books on a PC. If someone comes up with a really sleek PC-compatible tablet you know where this is going, especially if you want links to the Internet (which I expect content to have) and color.
The thing most e-reader vendors have failed to recognize is that Amazon isn't in the e-reader business, it's in the content selling business. That means its business model better be about selling as much content as possible to all comers (as their PC-compatibility tool implies) rather than worrying about who sells the most readers.