What is the future of XHTML, now that Tim Berners Lee has recognized lack of take-up and kicked off further development in HTML? It's clear that even XML enthusiasts are now having to re-assess XHTML and accept that it could be years, if it all, before XHTML gains wide use.
The first reason why XHTML hasn't caught on is the classic chicken and egg scenario. Internet Explorer doesn't support XHTML (except as a broken version of HTML) because there are so few developers using it, and developers don't use XHTML because Internet Exporer (IE) doesn't support it.
And the second reason is that up 'til now the main benefits of XHTML are in computer parsing and XML data integration. But while browsers handle parsing errors, and most structured data is still in non-XML relational databases, these benefits haven't been enough to outweigh the extra effort of using a stricter language.
With the recent rise of XML standards like Atom or SVG, the benefits of XHTML are much more obvious. Trying to embed HTML content inside Atom, or use XML data sources to populate HTML pages, is currently unsatisfactory due to namespace and mime type problems. And Ajax lends itself to the kind of scripted data transformations that XHTML thrives on.
But without support from IE, this kind of use is unlikely to catch on. So what are the chances that IE will be upgraded to handle XHTML? Up till now, precisely zero - in fact there wasn't any new functionality at all in IE for five years.
Now IE development has re-started, XHTML could be just what Microsoft needs to regain momentum on the internet. Firstly, as Kurt Cagle points out, XHTML enables them to move ahead with a new platform free of legacy issues, while maintaining support for masses of HTML code. Secondly, XHTML supports their new Live strategy of merging desktop and internet apps - I suspect MS Office developers are now lobbying for IE improvement that previously they stifled.
The current rumours from Microsoft are not encouraging. The IE team have plenty of work to do, even to fix bugs in their support for existing standards such as CSS. And their history of supporting standards they haven't developed themselves is not great.
But the fact remains: without XHTML, Internet Explorer will not reach its potential. And without Internet Explorer, XHTML will not reach its potential.