Competition is heating up in the market for handheld electronic book readers. (NASDAQ:AMZN) and Sony (NYSE:SNE) had better get nervous -- and get busy.

The latest entry will be the iRex DR800SG, a promising model that raises the bar on specs (with a trendy touchscreen that is sorely lacking on Amazon's Kindle, but will be available in the next generation of Sony's Reader) and price points (at $399, it will be slightly more expensive than the entry-level Kindle).

The iRex brand isn't a household name outside of Europe, but iRex is riding in on the shoulders of giants. It will be sold through Best Buy (NYSE:BBY) and Barnes & Noble (NYSE:BKS). Its 3G wireless connection to receive digital books and newspapers is being powered by Verizon Wireless.

The iRex isn't the only potential Kindle killer in the offing, either. The hyped-up Plastic Logic reader should hit the market next year. It's also just a matter of time before Apple (NASDAQ:AAPL) coughs up a tablet that may make today's e-book readers obsolete.

The industry is still in its infancy, with roughly a million readers sold last year. That's changing quickly. Market trackers iSuppli and In-Stat see 18 million readers selling in 2012, and 30 million in 2013.

Austen, we have a problem
Those sales targets are ambitious. To reach that mass audience, e-readers' prices need to head lower, and potential buyers need to see a clear leader. Neither will likely happen anytime soon.

As cool as the readers are, a consumer needs to read a considerable number of hardcovers to justify the $300-$400 investment. Digital newspaper subscriptions are helping shorten the break-even point, but the high price still makes Kindles and their kin a hard sell for anyone other than bookworms and early gadgetry adopters.

Wireless carriers won't subsidize these devices, the way they do smartphones. The battle lines have been drawn. Kindle has Sprint (NYSE:S), Sony has AT&T (NYSE:T), and iRex has Verizon, but network connectivity is a freebie. The carriers aren't collecting chunky wireless bills, the way they do with cellphone owners. Premium data plans may arrive once the devices can do more, but that's only going to make electronic readers harder to justify as a consumer indulgence.

Potential buyers will also want to make sure that they're not buying the next Betamax or HD-DVD. Kindle may wear the crown today, but the flooding marketplace is going to confuse audiences.

Readers may love to be surprised by literature, but before they invest hundreds in an e-book platform, they'll probably want to know who's going to be left alive at the end of this story.

What will it take for e-book readers to go mainstream? Post your thoughts in the comment box below.

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Longtime Fool contributor Rick Munarriz has been a Kindle owner since last year. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. He does not own shares in any of the companies in this story. The Fool has a disclosure policy.