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* ubiquitous: both penetration in the population and capability will increase.
* ultra-portable: the phone is a 'must carry', people are almost never without it and thus it is designed to be easy to carry.
* connected: all that Kindle goodness is already included.
* based around the human hand / pocket: the ergonomics are centered around one handed operation, lightness, etc etc. Phone screens will probably grow to 'cover' the whole device, but they probably won't get much larger - already the iPhone is probably 'too large'.
You can build a book reader that takes advantage of all the above features, works within the constraints, and delivers a good reading experience. You can see an example at http://www.booksinmyphone.com they have hundreds titles they give away. You can install straight from their mobile site, or via PC.
The second problem is that many people still prefer an actual hard copy to lay in bed and read. The new digital readers are not really comfortable and there is just some tact feeling that is not represented in an actual book.
The new readers are nice and I do own several but they all have their problems at this point. So I do agree with the author for the most part but as to wheter or not they will replace standard books remains to be seen.