No, you didn't read that wrong, and yes, I was as surprised as you.
Details are still scarce on the features, release date, but this is something they had planned to do this year. After yesterday's shocking revelation from Google Digg made their feed reader their first priority.
Digg hasn't been in the news much lately. This social news site fell from prominence as a result of the poorly conceived Digg 4.0 redesign. It was quickly abandoned by many users who flocked to Twitter, Facebook,and Reddit to share news, and the last time Digg crossed my radar was last July when the site was bought by BetaWorks for an undisclosed sums.
I have high hopes for Digg's new reader. These folks are already fans of Google Reader (what blogger isn't) and they've been running a news site for some years. And even though Digg did muck up their last major redesign (and the current Digg website is far to prettified and information-poor), my fingers are crossed that they will get this one right.
There is a huge opportunity here for someone to step into Google Reader's shoes. That service is an essential tool for anyone who follows a lot of RSS feeds. In fact, the vast majority of of the followers of this blog (76%) depend on Google Reader or a service that plugs into Google Reader. Extrapolate tat statistic to all news junkies that use RSS and suddenly there are tens of millions of users up for grabs.
Digg is also planning to release an API so all the 3rd part apps that now work with Google Readercan switch over. That's going to make the next 6 months to a year rather interesting, because Feedly is also working on their own Google Reader replacement.
I can't wait to see who picks up the market share abandoned by Google Reader.