When it comes to performance, there is more than just the transfer that is important. Our clients have consistently wanted to avoid applets because of the several second delay needed for the JVM to start. Ajax doesn't experience this problem, the JS VM is always ready to go. Sure, if you have already visited a site that has an applet, the JVM doesn't need to load, but those sites are increasingly rare, because so much of the web is moving to Ajax.
Look where MS is going. If you've seen WPF running as an XBAP in IE, then I think you might find your answer. Microsoft is directly targeting Adobe Flash and to a lesser extent Java applets and Java Web Start for "rich Internet applications".
AJAX doesn't cut it for very complex applications. It's a mish-mash of technologies that does not scale for enterprise type apps (i.e. healthcare management applications). Interestingly, I think Java applets and Java Web Start may get another look in these new RIA times. Java 6 rocks for Swing support and having done some WPF programming, Java does have some advantages here (partial trust issues with WPF come to mind immediately). Hopefully a new Swing book from the SwingX guys (Chet Haase, et al.) helps the Java cause.
Microsoft sees the long term future with WPF and WPF/E. Don't be fooled by their recent ASP.NET AJAX release. WPF is where it's at.
-- chris --
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