The newest version of Microsoft's Flash-contender, Silverlight 3 was released to web yesterday. Download here.

Features include:
• Media: GPU hardware acceleration, new codec support (H.264, AAC, MPEG-4), raw bitstream Audio/Video API, and improved logging for media analytics
• Graphics: GPU Acceleration and hardware compositing, perspective 3D, bitmap and pixel API, pixel shader effects, and Deep Zoom improvements
• Application development: Deep linking, navigation and SEO, improved text quality, multi-touch support, 60+ controls available, and library caching support
• Data: Data-binding improvements, validation error templates, server data push improvements, binary XML networking support, and multi-tier REST data support

The new Silverlight 3 should enable better delivery of HD content using GPU acceleration instead of the usual CPU-intensive Flash. Here's a demo of Smooth Streaming which enables continuous playback at variable bitrate.

The big question now is whether Silverlight 3 will be used to power Office Web Apps? This Monday, you'll get the answer.