I might place a bit of a wager on Silverlight
I think dismissing Silverlight is a bit premature.
As a .NET developer, within 5 minutes of taking my first steps in looking at Silverlight I could see where it is going.
Dismissing .NET as "shite" is coming from a position of ignorance. Microsoft's biggest problem is actually in playing a different sort of catch-up in a market that is not really their traditional line of business. But once they begin to, look out... because I think that to evolve Silverlight from where it is now (infancy really) to delivering very very serious web-served business apps in a browser is going to be relatively easy for them to do. I'm kind of astonished that .NET is sometimes dismissed off-hand, because it has developed to a very powerful stage, and if there is one game in which I WOULDN'T want to be taking on MS it is that one.
Competitors are in a sense coming from opposite ends of the planet. Flash has the established market position, and has been evolving into a business technology. Microsoft already has that underlying technology. Serious technology. Personally, if I was say Macromedia I as sure as hell wouldn't be smugly dismissive.
As for a difficulty in understanding the emerging MS technologies, isn't that true of anything? VS 2008 and .NET 3.5 has coincided with an explosion of new technologies... Windows Presentation Foundation, Windows Communication Foundation, LINQ, Silverlight, so on. They have some real learning curves associated, but that's proportionate to what's under the hood.
Anyway, back to work... if .NET is shite I have developed some strange fetishes, because Visual Studio and the .NET platform seriously turns me on. At the end of the day we each understand the technologies that we live with. How well MS can market Silverlight.. who knows? But if it begins to gain acceptance... it could be competitors playing their own kind of catch up.