(As always, personal perspective and opinion only.)
It is no surprise that Microsoft intends to make their new application markup language "XAML" usable on the web. However, they way they are approaching it when announcing Silverlight is a surprise! Without a second thought I would expect IE native support or some ActiveX component shipping with Windows – now they are launching a NPAPI plugin with great hype and PR. Voila, Silverlight will work in Firefox, it will work on the Mac, it will work in Opera!
We have yet to see if the NPAPI version will be as feature-complete as the ActiveX component they presumably will give IE. (Not another crippled, outdated WMP-type DLL please!) But given the PR's emphasis on the cross-browser part they seem quite confident at being able to keep it compatible.
I guess Microsoft understood a couple of things, first that services is a lot about trust, and after some mixed experiences with Windows and IE quality problems and monopoly behaviour they have a lot of work to do to gain trust. Secondly, this shows they are seriously investing in XAML as a content delivery language – it is more important to them that XAML is adopted than to give IE or Windows a competitive edge of eye candy. And that is a surprise! MS is clearly very, very comitted to getting XAML used on the Web.
What's their vision for XAML – just competing with Flash? I don't know XAML but it is a sort of markup language after all.. While there are Flash-sites around and video content is a recognised Flash stronghold, core Flash usage has been adverts and games, less about delivering text and image content. Will XAML actually compete with HTML for content markup?
Silverlight or dark horse? The future will tell..