When I first used Microsoft Reader I thought it was going to be huge. Finally, I can buy all my computer related books for less money and in electronic format. I can read them with my Pocket PC on trips so I don't have to carry a bunch on the plane, at home I can use a laptop because I prefer electronic media over physical paper books. It would have been something like iTunes is today. The fonts were very easy to read on the screen and scaled well between a pocket PC and a desktop PC monitor.
The problem that killed it was the restrictions. A book you purchase will work on a limited number of devices before you would have to buy it again. Apple solved this problem by allowing you to deauthorize a computer and allow it to be on unlimited iPods. Probably most people prefer paper over electronic books too. I was a minority. The market never caught on and seemed to have died. I only bought one book because of the poor selection. It was a good idea but poorly implemented.
I use PDFs and HTML based technical manuals now. Hopefully in a few years, Adobe and Apple will team up and do this when people are ready.