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.
Typically ebook readers are larger than PMP's with larger screens. If you're going to read for a few hours, then the screen of a typical PMP becomes pretty eye-straining (due to size, contrast, and brightness).
DRM is not to prevent other files from being readable on the Kindle.
Plenty of free e-books in Mobipocket format show up fine on Kindle.
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