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Adobe has been talking about this publicly, in general terms, for almost a year. I don't think it's a *respose* to Silverlight, since the current public (not beta) iteration of Silverlight is about where Flash 6 was 5 years or so ago.
This is a great initiative, as it opens the door for single-source applications that can be delivered to any supporting device. It also opens the door to an updatable player, rather than one that comes with the device and is not upgradable.
I've been trying to 'sell' the idea of fully interactive content on PDAs and smartphones for 6 years - since I discovered the Flash 5 player for PocketPC. But there has been too much fragmentation across devices, device operating systems, service providers etc to make that truly possible. The promise now is that 'any' feature supported by the Flash or AIR player should be supported by any device that can have that player installed. Features that are unsupported, i.e. a video CODEC, or Sound or whatever should fail gracefully (sort of like CSS) but in a general sense the user experience should be good on any device.
It will take a little while before this shakes out properly, and I hope to see NONE of the fragmentation and hassles that Java prorammers have to deal with.
Anyway - I'm excited by this announcement.
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