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With the big A4 sized screen it transforms the Kindle into a device suitable for textbooks. Perfect for college and highschool students. No more carrying 50lbs. of books.
With the bigger screen size they should also be able to display PDFs.
If they do aim the device at students then it would be nice if it supported note taking with a stylus.
It had better support folders or some other means of better handling a large number of books. Sorting by author and title doesn't cut it.
I think they can provide improvements to content as well. For $20 or so they could provide a one click option to download the top 500 classic books that are copyright free. They should also allow the purchase of an entire series of books. For example, I like Stephanie Meyers Twilight series, so I should have a one-click option to download all 4 books (at a discount). This means Amazon also needs to get to work on filling the holes of certain popular series. Imagine if you could download the top-100 science fiction books of the twentieth century for $50 and one-click.
As to the future --
I tend to think that it probably won't support color, but I hope 3.0 does.
I also think refresh rates will improve, and at some point animated images will be supported. When that happens the line between reader/computer will become blurred.
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