Microsoft decided they needed to compete with Netscape for the internet browsing market and created Internet Explorer.

    Microsoft decided they needed to offer a development model to compete with Sun Microsystem's Java and they created the .NET Framework.

    Microsoft realized they were behind the curve on AJAX implementations such they made Atlas, now simply ASP.NET AJAX.

    Microsoft realized that Adobe was dominating interactive media, including video with their Flash and Shockwave players, acquired through their acquisition of Macromedia. At first Microsoft did nothing. Now they have released Silverlight, an exciting new competitor to Adobe Flash.

    Silverlight promises to bring the same sort of competition to interactive web media as Firefox brought back to the browser market. It offers radical performance for a brand new application and the familiarity of traditional languages (C#, VB, JavaScript). The days of Flash (an expensive choice) being the only choice are over.

    Furthermore, we can expect an arms race between Microsoft and Adobe as they compete for applications that can work both online and offline. Adobe with their Apollo framework, and Microsoft with its Silverlight platform.

    There is a great article by Nik Cubrilovic over at TechCrunch called The Web Just Got Richer that is an excellent overview of Silverlight and what it means. Microsoft also has a community site based around exposing the Silverlight technology.