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1. Lack of color for reading textbooks IS a problem, but I'm sure that will come with time. Not a huge short-term deal breaker for me.
2. Speed of turning pages and ability to bookmark pages to be able to quickly search through books is a huge deal for students. Waiting even a half second per page turn is not OK. (think: open-book exam)
3. Textbook pricing needs to be DRASTICALLY lower than current new textbook pricing, not only to help offset the upfront cost of the reader, but also to consider that many students justify paying higher book pricing only because they know they can sell the books back used at the end of the semester. Don't agree? Ask other students... Yeah, it's great to be able to keep the book forever, but there needs to be a dang-good pricing incentive to buy an eTextBook version of something most students will only read once or just use for reference for a few months (but let's be honest here, some won't ever even crack open some of their books).
I really want to be able to jump on board with eInk readers, but I think I still need to see more improvement before it becomes a viable replacement for me. I'm pleased to see the progress though, along with the face that Amazon is getting institutions and publishers on board. I look forward to the day I get one so I can throw a good old-fashioned book burning... who's with me?? ;-)