Doesn't seem likely to me, for three reasons — some of which may be just me, but …
1. Reading on an e-Ink e-reader in any sort of outdoor setting is insanely better than on any tablet. Plus, battery life.
2. Cost. If you're looking for something just for reading, you're not going to by a $250 (or much more) tablet. Now, if you have nothing and you want to get into tablets, you might just get a tablet, and suffer through reading on it. But I suspect there are not a lot of folks out there who wanted to be able to electronically read books who haven't already gotten an e-reader. (Discussed further down).
3. Having a separate e-reader and tablet is fairly trivial in terms of "convenience." Really.
So why are sales of e-readers so far down? Well, duh, my own experience aside, most people don't need to replace their e-reader each year. Once you have one, you have one, until it breaks or gets lost. I'm not aware of any (e.g.) Kindles that have gone technically obsolete, either, so there's little of the upgrade fever that possesses the tablet, laptop, and computer market.
(Though, honestly, that Kindle Paperwhite looks kind of sweet …)
So, yeah, I expect e-reader sales to be flat or down since everyone who was likely to buy one probably already has. But that doesn't necessarily mean that folks are tossing their Nooks and Kindles and reading on their Galaxy Tabs and iPads instead. Instead, it means the e-reader market is fairly saturated, and the tablet market isn't.
What I expect is that Amazon, B&N, etc., will be watching more carefully the sales of books to e-readers vs. tablets. _That's_ the real indicator of whether e-readers are dead.
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RIP e-book readers? Rise of tablets drives e-reader drop
IHS iSuppli says the e-book reader market is on an ‘alarmingly precipitous decline’ — likely down 36 percent this year and 27 percent next year — as tablet sales soar. Read this article by Shara Tib…
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I always have to chortle whenever I see one of these articles predicting the death of something. I just got a tablet but I never read on it. I love me kindle for all the reasons you cite.
I see the appeal of the old Kindles and other e-readers for novels and the like. Unfortunately, my job and hobbies both require easy and fast access throughout large, full size, and color references (textbooks, scientific periodicals, and RPG books). Consequently, a tablet operates better for me than an e-reader. The limiting factor for the e-reader is the e-ink screen's slow refresh rate. If they find a way to get that down, I might get a large-screen version, but the problem seems innate to the technology.
And your considerations, +Gary Roth, are all good reasons (color, form factor, quick flipping through pages) for a tablet. I don't think that affects the casual fiction reader as much; the e-Ink refresh can sometimes be mildly annoying (esp when not reading linearly), but that only comes up for me on rare occasions.