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The Kindle plays MP3 files - really no way of telling where those mp3 files originated. As said, the sound quality is nothing to jump in glee over although it is certainly adequate for audiobooks. The Kindle's strength is in reading.
I imagine the rumored soon to be released Amazon Tablet will have streaming from the usual places - Pandora etc. - but will also almost certainly incorporate the Amazon Cloud player. I think it will likely be WiFi though or a 3G subscription, not free 3G.
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