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Hands down, the Kindle 3 wifi runs rings around the Kobo -- and for pretty much the same price. Amazon's book store is hands down the better store. I much prefer the Kindle 3 font and the way it more completely fills the page. And most Kindle books are justified text with para indents and no extra lines between paragraphs -- more words per page at the same font size means less page turning.
But ... I enjoy the Kobo: it fits nicely in the hand and it brooks no distractions. It also gives me library book access. And, while the kobobooks store lacks all the extras that makes browsing on Amazon such a joy, it also features titles not available at Amazon. I've been reading mysteries from the Dundurn Press, for example.
I can recommend either, depending on the reading needs of the user: and I often recommend both. As ebooks are generally WAY cheaper than pbooks bought in a bricks and mortar store, it's not long before the eReader is actually a net savings.
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