Alas, it's not updateable by user and the device must be sent in.
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Update your Reader firmware, compliments of Sony.
Sony has created a firmware update for your Reader, allowing it to remain compatible with the new eBook Store format. This update will allow your PRS-500 to support the ePub and Adobe DRM format and add the ability to re-flow PDF documents. Due to the nature of the work required, you will need to send your PRS-500 Reader to the Sony Service Centers for updating.
All you need to do is complete the request for firmware update through the link below, or call 866-962-7669. We will provide you with a pre-paid UPS label for sending in your Reader. You should have your PRS-500 back within 14 days, with the firmware update installed.
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Alternatively, you can trade it for a newer model.
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Trade in for a new Reader Pocket Edition or Reader Touch Edition:
Trade in your PRS-500 when purchasing a new Reader Pocket Edition or Reader Touch Edition. You will receive $50 off of the Reader Pocket Edition or $75 off the Reader Touch Edition.
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Linky.