I was just watching the Smooth Streaming video demo, it's pretty impressive;
[iis.net...]

Expression 1 & 2 were quite good products. I'm looking forward to Expression 3. They're stressing standards compliance with this version. That's encouraging.

That video was kind of violent.

Microsoft claims that [...] more than one-third of all Internet-connected devices had the plug-in installed

I guess the usual caveat of vendor supplied numbers applies, but even if true, why would anybody bother spending 1000$ on an authoring tool and the work for making content available in a platform that locks you in onto IIS as a server and that 66% of your visitors can't see to start with?

There's plenty of visitors who run minimal rights and who can't even install the client viewer at all.

Esp. when there are alternatives available that are installed on 99+% of visitors (flash) ?
In the last month on one of my bigger websites according to google analytics I had a full and complete 100% of visitors having flash and even nearly 75% of them on a 10.x version ...

And after what Microsoft did with the ISO standardization procedure for their XML like office documents, I'm very hesitant when they speak about standards in relation to their proprietary products. They lost nearly all credibility there.

I think most people would use this for online applications or games not as a flash replacement for the reasons swa66 mentions. Something like tweetdeck or acquisio that require you to download something extra.

"I guess the usual caveat of vendor supplied numbers applies, but even if true, why would anybody bother spending 1000$ on an authoring tool and the work for making content available in a platform that locks you in onto IIS as a server and that 66% of your visitors can't see to start with?"

The fact that there is no Linux version doesn't help either (Moonlight doesn't seem to work with many sites).

Esp. when there are alternatives available that are installed on 99+% of visitors (flash) ?

On the other hand what type of video can be created by 90% of people out of the box? WMV

Delivery of this format to different operating systems and browsers opens a lot of doors especially for Community based sites with low CPU resources or non existent server side encoding .

Let's say you have a forum for example on one of these shared hosting plans offering huge amounts of bandwidth and storage. Any member with a windows machine can edit and encode the video locally and upload it, you the site owner only need a silverlight player and the ability for larger uploads.

That is a pretty big sledge hammer.

I'll be honest, I'm a webmaster to make money, it's my livelihood. That being said I find that a " media and rich Internet application solution" does absolutely ZERO to increase my bottom line, in fact it detracts from it.

When companies like Facebook and Youtube figure out a way to monetize transient untargeted regulars i'll devote more time on bells and whistles, right now solid, informative and useful content trumps any wow factor this product delivers imo.