This makes an interesting development. I wonder if MS is going to come out with some form of XAML-HTML5 converter to support the developers who have devoted significant resources to Silverlight on the web. Silverlight *is* Microsoft's tool for Windows Phone 7 development so that's not an entirely lost investment.
Personally, I love XAML and use it for client development. WPF is far superior to WinForms but the loss of Silverlight as a long-term "supported" web tool isn't going to sit well with many.
TechDays Ottawa is coming up - it will be interesting to see how this announcement plays out at it. I'll be speaking on using Expression Blend and SketchFlow for prototyping but I certainly won't be focusing a lot on Silverlight as an application platform - WPF for clients is where it's at.
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I've reached the point of automatically presuming that anyone who bets heavily on particular development or consumer technology from Microsoft is an idiot until proven otherwise.
How many times have we seen this before?
The shelf-lives are getting shorter, too!
That's why the best way to design an app is to be able to replace the guts at any time.
But you're right about the shelf-lives. Silverlight 1.0 was a non-starter - weren't the Olympics supposed to be the crowing glory for Silverlight applications? Now it will have to be HTML5.
But think of IronPython and IronRuby - those didn't make it past a year, did they?