Key functionality is still missing in the HTML5 stack. E.g. try and write Chatroulette in pure HTML5, CSS and JavaScript; you just can't. That's a justification for the product space Silverlight and Flash are in. And classic MS, they were late to the game.
Silverlight is more than just for the browser. It's also for application development, and for places like on the Windows Phone. It's acutally pretty cool stuff.
Good question - I have no idea who Silverlight is for. It might make sense for internal corporate applications - but they don't need to look very pretty so all the integration with design stuff is irrelevant.
it's actually pretty nice for that--- with vaguely reasonable effort you can make the same app run on .NET on the desktop and Silverlight on the browser
The latest version of the enterprise trash I develop for replaced a mid-90's Win32 GUI with Silverlight running in a browser... leaving intact the Java database connection code. When I installed it on my machine I had to reinstall Java before it would work.
But that's more a testament to the vendor's "now with $AWESOME_PLATFORM!"-driven software architecture paradigm than any real fault of Silverlight or Java. (Except that they both appeal to those sorts of people.)
Silverlight 3 began the push into the desktop, and Silverlight 4 takes it even further. WPF is getting phased out, and Silverlight is becoming the way to make desktop apps with an MS stack.
It's aiming at the same people who'd otherwise use java applets - i.e. web based applications that need to do stuff flash can't (e.g. file system operations or just use an exiting java lib or even just more easily communicate with a java-based back-end system) or for stuff flash is simply too slow for.
To answer this question you must answer, why are they pushing HTML5? The reason is I think one of the most unnoticed stories in the industry. I think MS actually thinks they can deliver the best platform for HTML5. They think HTML5 will actually be a good rich client platform. They're going to invest a boatload so that HTML5 runs better in IE than any other browser.
So what about Silverlight? Silverlight is really a tooling play. And with HTML5 they're beginning to see that they can bring the Silverlight tooling over to HTML5. The big question is probably layout more than anything else.
Silverlight then becomes their platform for future features of HTML. Rather than "embrace, extend", they extend via a plug-in, and then as feature prove useful, they get them through standards (which is common in most standards spaces).
This is really the path that Adobe should have down with Flash, and based on what I've seen with CS5, I suspect it is, they're just getting to it really late.
To give themselves the option? Having a high install base could prove to be useful down the track. I think silverlight helps the developer more than the end user. I don't see it as something really necessary for its graphics/ multimedia functionality. More so for allowing a .NET developer a better model for making a ajax based web app. And of course for .NET desktop ports.
