Thanks to an alert friend who just pointed this out to me. An interesting article in the SMH (and AGE too, I presume):

Microsoft, Adobe competition heats up

 A couple of clarifications:

• I don't think Expression Studio is really going 'head-to-head' with Photoshop and Illustrator. While Expression Design is a great tool for creating vector-based graphic assets for websites and applications, (e.g. it talks XAML natively), Photoshop and Illustrator still have their place! I visited with one agency last week who are adopting Expression and WPF but are currently creating the main graphic assets first in Illustrator - the tool the designers know and love, and then importing them.
• The article isn't super clear on whether/which tools are cross platform. Silverlight (was codename "WPF/E") is cross-platform (Mac & Windows, IE, Firefox and Safari). Windows Presentation Foundation (WPF) is Windows Vista, Windows XP and Windows Server 2003.