What else was wrong with Silverlight 2? From a developer's point of view, no single tool covered all needs; Expression Blend 2 did graphical XAML design but couldn't edit code, and Visual Studio 2008 did code editing and XAML editing and preview, but couldn't do graphical XAML design. That will be fixed in Expression Blend 3 and Visual Studio 2010, both of which have solid betas (check out our review of the Visual Studio 2010 beta here). For designers, the Expression Blend 3 Preview already imports Adobe Photoshop and Illustrator files, another lack in Blend 2, and will add 'SketchFlow' prototyping and interactive behaviors in a future release.
In addition, Silverlight 2 lacked 3D graphics, pixel shader effects, writing to bitmaps, animation effects, themes, decent data binding, and a reasonable assortment of controls. Those deficiencies are all fixed in Silverlight 3.
Rich and obscure
Silverlight has long been strong on execution speed and language support. Both of those are getting better still in version 3.
I do not expect many Adobe shops to give up their Flash, Flex, and AIR for Silverlight 3. I do expect many Microsoft shops to do more RIAs with Silverlight now that it's more capable and to create lightweight browser/desktop Silverlight 3 applications where they might have fashioned heavier-weight Windows Forms or WPF client applications.
Some mixed but Microsoft-oriented shops might phase out their Adobe work in favour of Silverlight on integration grounds, but some won't. Meanwhile, the next generation of streaming media adoptions are likely to be closely contested, now that the two technologies are near parity.
Of course, in a few months everything will change again. Stay tuned.