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1) Does Microsoft encourage Developers to use this beta SDK for Production Apps?

No. The beta is meant for testing and evaluation purposes only.

2) Doesn’t storing the Amazon Key/Secret on the Device represent a security risk?

Yes, it does, and it’s one of the primary reasons why this SDK was released as a beta (see question 1). Storing AWS credentials device side is discouraged. The preferred solution for production apps is to leverage a Proxy service that authenticates to AWS on behalf of the user. Future updates to this SDK will include templates for such a service, and guidelines on how apps should interface with it.