ummm You can store 3,500 books on the Kindle Touch and you can buy books from many independent dealers that sell Mobi books. Pretty much any e-book store that is not tied to an e-reader sells Mobi books because there are so many Kindle users out there.
You can save your purchases from Amazon on your computer, I have all of my books saved on my computer, and there are ways of removing DRM if you want.
Kindle gets its firmware updates over the WiFi or 3G connection. They can also be sideloaded if you want to.
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