This presupposes that people will be willing to buy (and carry) multiple devices or that they'll prefer a reader over a more general purpose device with a less pleasant reading experience. It's possible that they'll buy an iPad and stick to paperbacks. Another possibility is that they'll simply forego reading altogether.
Why read when I can just as easily kill the time playing Harbor Master HD on my shiny new toy?
Don't get me wrong, I love my Kindle and still use it for reading around the house or when I go out with that specific purpose in mind, but the iPad is what ends up in my bag on most days.
As a side note to those considering both a Kindle and an iPad, I'd go with just a Kindle 2 rather than a DX. The DX's larger screen is only really useful for reading PDFs, and the iPad is (for me anyway) better at this.