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Since AZW is MOBI, the existing MobiPocket Reader software could be modifed to read most "Kindle" ebooks. However, Amazon might well target only "high end" devices - which will allow them to add features to the basic MOBI Reader without cries of outrage from all the existing MOBI customers with older hardware.
Amazon reportedly prevented MobiPocket from releasing an iPhone Reader recently, and this may be because there will instead be a Kindle iPhone Reader. Similarly there might be a Gphone reader, etcetera.
What Amazon is selling is the Kindle Store and its delivery mechanism. I'm sure they will require: a) their software on the device and b) 3G/WiFi access on the device. This rules out all competitors dedicated reading devices. It will, however, allow many more people to buy from the Kindle Store and may be bad news for competing ebook stores.
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