I wonder how much this decision was based on the troubles Adobe themselves have had. Conceivably, Microsoft didn't want to get into an all-out war with Apple's

I wonder how much this decision was based on the troubles Adobe themselves have had. Conceivably, Microsoft didn't want to get into an all-out war with Apple's iPhone/iPad platform, like Flash did, and find out they'd lost. Silverlight is certainly in a worse position to fight Apple than Flash was.