The company behind the Amazon Kindle’s eInk display, E Ink, says its new Triton color displays will be used in Hanvon’s upcoming eReader, making it the first color eInk device on the market.

The New York Times reports that Hanvon’s 9.68-inch, color touchscreen eReader will be commercially available in China in March 2011 for about $440. The device will come with Wi-Fi and 3G connectivity, according to the Times.

“E Ink Triton marks a major milestone in the eBook revolution,” said Hanvon’s Chairmain Dr. Liu Yingjian in a statement. “E Ink has the right technology, manufacturing capability, and know-how to transition Hanvon’s product vision into reality.”

E Ink says the Triton color eInk can display 16 levels of grayscale and “thousands” of colors. Like E Ink’s monochromatic displays, Triton is fully viewable in direct sunlight.

Triton displays update 20 percent faster than previous generations of eInk displays, except for E Ink’s grayscale Pearl displays, which also boast a 20 percent improvement in performance.

Market research firm DisplaySerach says color eInk displays will spur demand for a broader array of eReaders, with the market for color eInk display’s forecast to hit $5 billion by 2016.

Triton’s colors appear muted when compared to the LCD display on the Barnes & Noble Nookcolor. E Ink’s list of specifications for the Triton display says it has 4,096 colors. Barnes & Noble says the display on the Nookcolor supports 16 million colors.

Other color eReaders and tablets on the market today, like the Nookcolor and Apple’s iPad, use LCD screens. Though the screens offer better visuals than E Ink’s new color displays, they are far less visible in sunlight and have a lower battery life.