A lot of people are very excited about Silverlight, the technology that was formerly known as WPF/E.
Jesse says it will give Flash a real run for its money because of a better video story (emphasis in original).
Unlike Flash, Silverlight (the new name) will support DRM, it supports the industry standard VC-1 codec used in HD-DVD and Blueray, and it can take advantage of the built-in media streaming capabilities of IIS.
As for DRM support, I don't think that's of any real consequence. Jesse claims "companies that want to stream TV and movies over the web, will not consider any method that doesn't allow for DRM protection", but we're already seeing a trend away from DRM.
That said, there are certainly things to get excited about, particularly the prospect of cross-platform CLR support and the ability to develop Flash-like applications with the power of the Visual Studio environment (and not having to learn a new scripting language at that).
One thing worth noting is the fact that Flash is available today (according to most counts) on over 90% of computers. The latest version, Flash Player 9, is now reportedly available on 84.3% marketshare. Flash isn't going anywhere until Silverlight comes close to that number.
Obviously Microsoft can can cover a bulk of the Windows market easily through updates. The real test, in my mind, will be the penetration on non-Windows machines. I would agree that the install process is pretty painless though.
I'll post more after I spend time experimenting with Silverlight over the next few weeks.