Microsoft have been steadily porting a number of their key web properties to Silverlight over the last few months, starting with their dev sites, but the big (expensive?) coup was to get NBC to use Silverlight to broadcast the Olympics using Silverlight 2.0 (in beta no less).
For those who haven't come across Silverlight it's Microsoft's cross-platform entry into the Rich Internet Application space. People have compared it to Flash, but it's a bit more than that. With the ability to include HD video, act as a wrapper for C#, Python or Ruby, plus integrate seamlessly into a Visual Studio environment, it has a few more tricks up its sleeve. Just not the installed base.
So how did its debut go? Pretty well by all accounts. On 11th August, according to Microsoft, they served 250Tb of data on that day alone, and the uptake means that up to 8 million people a day are downloading Silverlight.
Adobe counter this with a smug 10 million downloads a day, plus an alleged installed base of 99% of all PCs online in mature markets, added to which they have a huge developer community with a strong vested interest in the platform.
My take is that Microsoft will start to eat away at Flash's dominance. Adobe's download numbers represent a large number of people downloading updates; Microsofts are nearly all first-time users of the technology. In the real world therefore Adobe is not pulling away from Microsoft.
Microsoft also claim there are 2.5 million .NET developers out there. All of those people will now be able to write Silverlight code right away, and even potentially repurpose existing applications in a relatively pain-free way.
But how to get the plug-in to the people? I can't see them being allowed to bundle it with IE8 for fear of further anti-trust legislation, so it comes back to content. Put up great content and people will put up with a 4Mb install.
When I first came across Silverlight it was called wpf/e (Windows Presentation Foundation everywhere) and pretty much the whole developer team was sitting in a small room in Redmond. The team passed 100 a year ago, and it's safe to assume it's still growing.
Microsoft has a lot at stake here. Bear in mind that this is effectively still a beta for Silverlight 1.0. Flash 1.0 was basically just a vector animation tool.
As an interesting historical footnote, the first people to use Flash online were Microsoft (MSN) in 1996 when it was called Future Splash. On the back of that success Jonathan Gay sold his company to Macromedia who re-christened the software "Flash", before being absorbed by Adobe.
So Microsoft only have themselves to blame...