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I sure don't know but I'd bet they outsource the disposal (wholesale the devices) to someone like a major E-bay powerseller, who probably goes through them one-by-one and verifies function to make a significant profit when they sell it. Recycling would also work but seems wasteful given how many functional devices they're getting. I suppose some high-end Sony models might get factory-reconditioned (e.g. PRS-900's).
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