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Or is it neccessary to have it installed but you don't use it? I've heard there are lots of problems with it
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It is necessary to have it, I think. It's how Sony Validates the reader, and sorts the DRM out. The problems aren't that it's buggy or crashes, merely that it's annoying to use.
Adobe Digital Editions ADE is what other companies, Waterstones etc use to contol the DRM.
I think - though I haven't tired it - you can use upto 6 devices per DRM, so you adn your sister
may be able to both read books one you has bought. If you each register your readers on each others computers.
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if I have to install the sony software on my computer, can I later remove it and install it on my new laptop (which is arriving in a couple of weeks)? It's still going to recognise my reader right?
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You won't need ot remove it, and should be able to use your reader on both laptop and desktop. It will count as one of the 6 above.