I noticed this today.
One of my friends is currently developing a site using Silverlight 3 beta and he gave me a demo. I was extremely impressed. It seems much more responsive than the Flash equivalent to me and all the programming was done in .NET, so it was a more consistent approach than using the mish-mash that is AJAX/DHTML. What’s more, I was running the demo on Firefox on a Linux box, so there is no tie-in to Windows from the user perspective.
Could it be that Microsoft are finally doing something right for a change? Of course, Flash is ubiquitous, so it remains to be seen whether Microsoft can eat into that market, but the product definitely seem the real deal.