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Microsoft is seeking to compete with Adobe for Internet video with the introduction of Silverlight. Silverlight is intended to compete with Flash, as a cross-browser and cross-platform browser plugin. They cited support for both Mac OS X and Windows, in Internet Explorer, firefox and Safari. Linux support isn't mentioned, curiously enough, which is an arena that Flash may have an advantage in if Microsoft chooses to ignore it. The new format will be a modified version of WMV, that supposedly scales well:
Silverlight uses a combination of Windows Media Video (WMV), Microsoft's implementation of the Society of Motion Picture and Television Engineers (SMPTE) VC-1 video standard, and support for interactive video that can scale full-screen, high-definition video down to mobile small-screen video.
Based on .NET, supposedly it will be easy to develop for. All its merits aside, Flash has a huge advantage over any contendor, whether or not it's from Microsoft - Flash is everywhere. Do they really want to introduce yet another format?