Personally, I gotta agree with Mark Pilgrim.
In pure platform-warring terms, Silverlight is an almost smart move by Microsoft, although I still think they should have directly tried to get their hands on and embrace and extend Flash / Apollo rather than make their own competitor.
The crucial question for them is how much they are willing for the VM to float freely vs. whether they'll tie it into Windows Vista.Seems like it's planned for MacOS, but not Linux. Will they encourage the Mono guys to clone it? Is this actually a sneaky attempt to wrap MacOS in their own VM?
If I was, say, YouTube, why would I switch from Flash to Silverlight? (Actually, now I'm owned by Google, of course, I wouldn't. Full stop.)
Maybe there are two ways of looking at this.
On the one hand, Silverlight is going up against two strong incumbents : Flash and QuickTime. Both are going to fight back hard, and Flash can position itself as the "already platform independent" platform, because it has no Operating System to peddle (Nevertheless it may acquire a powerful strategic ally in GoogTube.) Clearly MS, rightly, understand that Apollo is a serious and bold attack on their ownership of the desktop (everything that Java tried to do but with a better programming language, a huge existing user-base and cuter graphics). At the same time there's Apple taking over the home entertainment zone with QuickTunes.
Can MS make something so compellingly better that it makes much headway here? Can it be so much better that Adobe or Apple couldn't match it?
On the other hand, maybe the best way to look at this is as MS trying to unbundle some of the multimedia functionality of Windows Vista and give it a more independent life, creating value in other contexts, such as a downloadable component for XP and MacOS.
Or maybe MS will be unable to resist tying in with Vista in the long run to try to sustain their monopoly.