I think if you're looking for a better reading experience the Kindle 1 is going to disappoint.
The reason to go with the Kindle (especially the Kindle 1 over the Kindle 2) is selection. I think the Kindle 2 can definitely hold its own against any of the Sony devices, but if it wasn't for the Amazon store (and personally I think the buttons are MUCH better on the Kindle than the 505) the Sony device is probably a better consumer product.
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