If Sony delivers on the promised feature set, it has a chance of creating a nice e-reader business.
Will it "kill the Kindle?" Who cares. Remember, the e-reader category is still in its infancy. Analysts estimate that only three million devices will have been sold by the end of 2009. Other companies like Plastic Logic have plans to introduce devices; everyone expects that Apple will jump into the market as well. Amazon surely has more innovations up its sleeve.
It's possible that an overwhelming winner will emerge over time, but it's equally possible that the category will be big enough to support a number of players.
…Any company seeking to create new growth should build its business around the customer, not the competition. If you focus on the competition, you can lock yourself into replicating the competitor's last innovation, leaving you gasping for air when they inevitably change the game on you.