Ebook readers have extremely high contrast/readability and are extremely energy-efficient, being able to display several thousand pages of material without needing to recharge. eBooks are a narrow product, but they have their own ways in which PMPs cannot compete.
Plenty of free e-books in Mobipocket format show up fine on Kindle.
Amazon can do a lot of money only from selling kindle, like Apple does with the iPod.
Typically ebook readers are larger than PMP's with larger screens. If you're going to read for a few hours, then the screen of a typical PMP becomes pretty eye-straining (due to size, contrast, and brightness).
A revolutionary portable reader that wirelessly downloads books, newspapers, magazines and blogs to a crisp, high-resolution electronic paper display that looks and reads like real paper, even in bright sunlight.