Later the author states that he believes price to be a factor of convenience (which I would agree with), but that needs to be stated in the intro because I was put off before even getting to the meat of the story.
The very first sentence is the problem:
"Life, it turns out, is a series of tradeoffs between great experience and high convenience."
No, it isn't. By pretending this is a hard and fast rule to all things in life, the author has taken the mistaken position that no product can ever be a great experience and be convenient at the same time. We know from experience - the iPod/iTMS, the Wii, etc, that this is just clearly false.
The author then further fails to use even the most rudimentary logic:
"the entire e-reader market consisted of just 1 million units in all of 2008, and Amazon nabbed only a slice of it. By contrast, Microsoft sold about 1 million Zune music players..."
Using this flawless logic, we can also surmise that the iPhone is a terrible failure - just think about how many non-smartphones Nokia sold last year! The iPhone only sold a fraction of those last year! Not all markets are built the same. There's no reason to believe that the Kindle wasn't a huge success in its market. The problem with the Zune is that it failed to capture even a tiny portion of its* target market - this comparison is completely invalid.
The Kindle is just a book reader. It can show you any book you want, but it's expensive and doesn't do much more than allow you to buy and read books. I guess it can read book to you, too. But that's about it. It doesn't let you browse the web (now /that/ would be pretty awesome). It doesn't let you play games. There's no developer ecosystem that I know of for it. It's a one-function thing that's very expensive.
Compare:
20 hardcover books, $20 each: $400. Kindle 2 and 4 books: $400.
It only becomes cost-effective once you've spent $720 on your kindle book reading system: your Kindle, and 36 books @ $9.99 each.