[JohnClif]

After thinking about this on and off, I now understand why Amazon decided not to support DRM .MOBI and went with .AZW instead.

Current DRM schemes do not account for selling and transferring files. In fact, since it is impossible to tie a DRM .MOBI ebook to a particular reader (because users might get a new reader), it is effectively impossible to enforce DRM if the original purchaser is willing to provide the key to another person.

The Kindle, on the other hand, is a closed system. The Kindle's serial # is tied to the user on the Amazon website. A record of all DRM ebooks purchased is also stored on Amazon, and associated with both the customer and the specific Kindle. Amazon could institute a firmware feature that would automatically verify each DRM ebook on the system with Amazon's server on a regular basis, and inform Amazon if a pirated file were found. Maybe they're doing that now. Who knows what data goes up to Amazon?

However, a closed system has advantages. Amazon could institute an ebook trade-in program, where you get partial credit for 'returning' a book to Amazon (removing it from your purchased book list), and they could enforce this by having the Kindle verify the 'ownership' of any .AZW book when you try to read it (by storing a copy of your purchased book list on your Kindle). Or, Amazon could facilitate 'selling' of used ebooks to other Kindle owners, by taking a bite of the 'selling' price for themselves and the publisher... call this the eBay model. The Kindle would certainly support this.

So, because Amazon can't guarantee that an individual is the owner of a particular DRM .MOBI ebook, it is perfectly understandable why they don't want the hassle and liability of supporting that format. And, because they control the Kindle, they could have all sorts of flexibility with .AZW ebooks.

Wonder what the future will hold....