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-I have an iPhone. There are a few books (those involving practical exercises, like cookbooks) where it would be really helpful to be able to read them on my iPhone. Is there a way to have the same book on both devices?
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Yes. The Kindle for iPhone app will allow you to do this.
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-I need to be able to highlight and make notes on some of the books I want to buy. Can I do that with Kindle?
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Highlights, bookmarks and notes... check.
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-I'm concerned about the inability to handle epub format. My biggest concern is that a lot of the e-books I'd buy in the future are Pagan books that would be small press published/self-published. Does anyone know enough about that market to tell me if I'd be okay with the Kindle? For instance, Lulu books are available as PDF for Adobe Digital Editions. Can the Kindle read that?
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The Kindle
can read pdf's. Whether or not it's an enjoyable reading experience depends on the pdf. Experiences with pdf's on a 6 inch kindle screen range from "wtf" to "I guess that doesn't suck." However, Adobe Digitital Editions will probably (but not certainly) have DRM--the Kindle won't be able to read that without stripping the DRM first. I know nothing about Pagan Books, but if they sell DRM free books, then you can convert them to mobi with Calibre.
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-I'd also like to be able to read fan fiction and other web-published fiction. Calibre handles that for Kindle, right?
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I don't know about Calibre solutions for this, but there are many browser add-ons that convert web-pages to Kindle compatible ebooks.
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-How sturdy is the Kindle? With a cover, if I drop it on, say, a linoleum floor, will it be okay?
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How tall are you?
I'd like to say it would survive, but I wouldn't want to find out. My Kindle 2 has taken a couple of hard knocks with no issues, but I can't attest to the Kindle 3's sturdiness. Let's just say "no' to this question to play it safe.
