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AFAIK the major effort is to develop a software format that will work cross-platform. I doubt they will actually make their own device. Most likely is they'll develop something for Adobe Air that will work on tablets, portable devices and computers.
I concur that magazines get a bit of a raw deal on the Kindle. I wasn't quite blown away by the Kindle magazine experience -- it wasn't bad but I concur that the Kindle really isn't made to replicate the "paper magazine" experience.
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