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I'd be careful about how to interpret this announcement -- it may well be that Kindle books will be supported on specific phones but the phone owners may need to buy the software to read the books. And the kindle books will remain as kindle format, it's just that the technology will be built into the software on the phone so they can be read, whether the software is licensed by the phone maker or by the individual owner.
I doubt that they will open their format to Sony for use on the reader, but on the other hand it's not all that far-fetched to think they might. It will ensure more sales of kindle-formatted books, which benefits Amazon possibly far more than selling the hardware readers.
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