At PDC09 two weeks ago, Scott Guthrie announced that the next release of IIS Media Services will deliver adaptive streaming video to the Apple iPhone. If you haven’t seen the demo, you can check the preview out by going to www.iis.net/iphone on your iPhone. What this preview shows is how IIS Media Services will allow you to repurpose Smooth Streaming content in real-time for different devices - in this instance, for Silverlight clients and an iPhone, without needing to encode the content twice. It is important to realize that the preview does not show “Silverlight on the iPhone.” Instead, the iPhone is using its native playback capabilities to display the special iPhone stream that is delivered by IIS Media Services.
A more detailed FAQ is available here.