I think you should look at Silverlight as a long-term play, just as Microsoft seems to be doing. There’s an obvious balance on when to use Silverlight vs. Flash when you’re concerned about reach and install base, but here are some reasons Silverlight is a good direction to move in:
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Second mover advantage – Just as Microsoft built a “better Java” with .NET, they’re able to look at how you’d design a RIA plugin from scratch, today. They have the advantage of knowing how people use the web today, something the inventors of Flash could never have accurately guessed. Flash can add features, but they can’t realistically chuck the platform and start over.
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Developer familiarity – While Silverlight is a new model, it’s not entirely unfamiliar to developers. They’ll “get” the way Silverlight works a lot more quickly than they’ll understand firing up a new development environment with a new scripting language and new event paradigms.
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Being rid of the timeline model in Flash – Flash was originally built for keyframe based animations, and while there are ways to abstract this away, it’s at the core of how Flash works. Silverlight ditches that for an application-centric model.
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ScottGu – ScottGu is fired up about Silverlight. Nuff said.
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Cool new features – While Silverlight still has some catching up to do with Flash on some obvious features (like webcam / mic integration, or 3d / graphics acceleration), there are some slick new technologies built in to Silverlight – Deep Zoom is one example. I’m seeing more “revolutionary” technologies on the Silverlight side, while Flash seems to be in maintenance mode at this point.