There's a new notice on the Microsoft Reader webpage today:
Microsoft is discontinuing Microsoft Reader effective August 30, 2012, which includes download access of the Microsoft Reader application from the Microsoft Reader website. However, customers may continue to use and access the Microsoft Reader application and any .lit materials on their PCs or devices after the discontinuation on August 30, 2012. New content for purchase from retailers in the .lit format will be discontinued on November 8, 2011.
That's a shame, but not a surprise. Microsoft missed their chance to get back into the game right around the launch of the Kindle, when the ebook market finally took off.
MSReader was one of the early Big 3 ebook formats, along with Mobipocket and Palm. The first apps were released in 2000, and at that time it was the most typography rich ebook format. It stayed the rich-format ebook format up until Epub was released.
To be honest, I suspect that the only thing keeping the format going all these years was that the DRM had been broken way back when. Seriously, hard-core ebook users used to buy this format because we knew we could convert it from LIT to whatever format we preferred. That's certainly why I bought MSReader format, and in fact that's the only reason I ever heard discussed as a reason to buy it.
As more formats got hacked, stripping the DRM stopped being quite so important, and that's likely why the format died out. DRM for Mobipocket/Kindle was hacked in early 2008, and the DRM for Adobe Adept (used on most commercial Epub) was cracked in mid-2009. Once everyone could remove the DRM from the format they preferred to read there was little reason to buy MSReader anymore.
BTW, if you still have DRMed MSReader ebooks then you might want to download ConvertLit. This will help you remove the DRM so you can convert your ebooks to another format.
via Social Times