The Display: Lower Price, Lower Quality
There's no question that electronic ink technology is completely different from what you seen from an LCD monitor. However, the first stage of E Ink's electronic paper screen production is essentially the same. There's a matrix similar to what you'd find in a computer display, except that E Ink covers that with a layer of transparent microscopic capsules that contain viscous fluid, along with positively-charged white pigments and negatively-charged black pigments.
For an e-book reader, the benefits of E Ink technology are obvious because image quality is independent of viewing angles and lighting conditions. It's truly like reading a pad of paper. Better yet, power is only consumed when the screen changes, like when you turn a page. That makes the battery life of an e-book reader nearly 100 times greater than that of an LCD-based tablet or mobile phone.
According to its spec sheet, Amazon is using the same 6" E Ink 16-level gray scale display (600 x 800 pixel resolution at 167 PPI) on the third- and fourth-gen Kindles. After using the new silver Kindle for a few hours, though, it felt like I was reading text on an inferior screen.
Turning on our microscope, text on the fourth-generation Kindle appears more dithered around the borders. Meanwhile, text on the Kindle Keyboard is slightly sharper, and the black is a little darker (focus on the "y" and "o" in the pictures).
We called up E Ink Corporation to ask if this was a batch-related issue, and was told that this is most likely due to Amazon choosing a particular grade of display panels. So, while the new Kindle comes at a lower price, the company is probably cutting its costs as well by using a slightly cheaper display.