This is really cool...the best use of Silverlight I've seen so far. Now Microsoft just needs to cook a clever implementation of Silverlight into the next version of Windows Mobile to have a truly powerful mobile platform.
Microsoft is a big beast to move, but once it gains momentum you should watch out. It's certainly not going to be tomorrow, but Windows Mobile will be competitive with iPhone eventually.
Windows Mobile 6.5 is due out Oct 6th, and "will deliver new customer experiences through an improved, easy-to-use user interface, better browsing capabilities and access to valuable services, including Windows Marketplace for Mobile and Microsoft My Phone"
Windows Mobile is the prevalent operating system on phones
If you work for Microsoft, you may find comfort in that fact, but for everyone else out there, I wouldn't bet on Windows Mobile dominance based on what's happening with the iPhone (followed long-term by Android).
Is there even a plan for this? It seems like Microsoft clearly lost this one and doesn't even care anymore.