Repeat after me: the average person doesn't read. The market for ebooks is a fraction of the market for movies and music.
OTOH, there is a viable market because there are such things as "avid readers" (people who read more than one book a month.) Those are the people ereaders are made for.
I predict that ebooks will be like jazz records: they not terribly popular, but they'll still be made because there's a devoted audience.