Amazon can do a lot of money only from selling kindle, like Apple does with the iPod.
DRM refers to the fact that you can't view Amazon Kindle books on other devices (including your computer), or on other Kindles - i.e. no sharing, the purpose of DRM.
Kindles can read a variety of non-proprietary, non-DRM'ed formats. They read TXT, HTML, JPEG, and non-DRM Mobi files directly.
DRM is not to prevent other files from being readable on the Kindle.
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