Anthony Sowden, project lead on the e-books devices at HP's Bristol Labs said: "We envisage the device as a media viewer."
HP is also looking at integrating audio and video into the devices, which are relatively light and easy to use and have a battery life of around five hours on full brightness.
The latest prototypes use "riffling" technology that allows the device to show digital book pages that can be turned in a realistic way similar to physical books as seen in the photo above.
Books can be viewed in one-page portrait mode or two-page landscape and the device has touch strips around the edge for scrolling up and down and turning pages.
Some Jane Austen books, which are out of copyright, have been loaded on to the prototypes and HP is currently talking to the Daily Telegraph about the digital newspaper viewer.
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