The general idea behind Microsoft Reader is that it only works on LCD screens (laptop computers, PocketPCs and in theory, the Tablet PC). With the proper control on the way LCD pixels blend and dither, you can create very crisp, clear text, that looks more "natural". It has a more impressive effect on PocketPCs with 16 bit color (iPaqs), rather than 12 bit (most notably the Jornadas). Microsoft reader does little more than anti-alias text on a normal gun-based CRT monitor.

I think that Microsoft Reader is a good example of a technology before it's time. There is no need for eBooks yet, and there is no demand. Many business entities, including Amazon, do not have the media-on-demand capabilities to deliver this to customers in a reasonable fashion, although, as mentioned above, it is quite impressive.