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It is my understanding that the Sony calls them page numbers, but they have no more correlation to page numbers in some physical edition than the Kindle's location numbers do.
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Yeah but it looks like the Kindle has thousands of locations - far from correlating to page numbers - whereas the Sony is more precise. I told my friend about this and he said if it is true, then that would seal the deal for him: he wouldn't buy the Kindle. So... yeah... the scale weighs back in favor of the Sony, though I'm still confused.